Calls for change to credit market

The Conservative Party has called for changes to the home credit market. Shadow Chancellor, George Osborne, unveiled the Tories' social responsibility template to tackle growing debt and financial exclusion at the party's debt summit. There is increasing concern over the level of personal debt in the UK, which is growing by about £1m every four minutes and reached £1,200bn - more than the country's total gross domestic product.

Figures unveiled by the Tories show the average household pays more than £3,000 a year in interest on debts. Total credit card debt reached £54.7bn this summer, and 3.4 million cardholders regularly make only the minimum repayment, thus maximising their interest charges, according to figures provided by the Conservatives.

Mr Osborne said: "This isn't just a problem for the people caught up in rising debts. It's a potential problem for everyone. An economy built on borrowed money is an economy built on borrowed time." Among the Tory proposals to curb irresponsible lending are plans to reduce overcharging by the home credit market, thought to total up to £100m a year.

Other proposals include a seven-day "cooling off period" before consumers can use new store cards, as well as measures to stem the growth in individual voluntary agreements (IVAs), which are increasingly used by private individuals to escape debt.

Under Mr Osborne's proposals, home credit companies - which offer small doorstep loans at three-figure interest rates - would be required to share data about customers' credit history as mainstream banks do, introducing more competition into a market worth up to £3bn a year. Around 3 million people are believed to use loans from the six companies that dominate the home credit market, paying interest rates ranging from 100% to 800%.

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