Credit card cheques to be banned as part of measures designed to protect consumers

Credit card firms will face new restrictions aimed at protecting consumer rights under government proposals published today.

Lenders will be banned from sending unsolicited credit card cheques and from raising credit limits without permission from the customer.

Recent research found that one in five people had had their credit card limit automatically increased over the last year.

The plans will be unveiled in the government’s Consumer White Paper, which aims to prevent a repeat of the credit crisis by protecting vulnerable consumers from excessive borrowing.

But the Finance & Leasing Association, who represent credit and store card providers, warned that the measures could threaten economic recovery.

Geraldine Kilkelly, of the association, said: “The lack of wholesale credit and the torrent of new regulation currently facing the industry pose the real risk that the size of the market will reduce even further, with serious implications for consumers — especially those who are most vulnerable.”

The White Paper will also include measures designed to crackdown on fradulent websites, which charge customers for goods that never arrive. Consumer Direct, a City watchdog, received more than 28,000 calls from January-March about alleged online scams.

Jonathan Brown, of the Society of Ticket Agents and Retailers, said: “Scam websites have become increasingly sophisticated and professional-looking, making it very difficult for consumers to tell if they are dealing with a reputable trader. Consumers lose thousands of pounds every year to these con artists.”

UK consumers owe at least £233bn on credit cards and overdrafts, according to the latest Bank of England figures.

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