Soaring bad debt hits credit card lenders
UK banks are facing mounting losses from credit card customers, with figures from the Bank of England showing write-offs rising to £2.1 billion in the three months to the end of June, up from £1.3 billion in previous quarter.
According to a BBC report, the 2010 total for bad credit card debt now looks set to exceed the record £4.1 billion written off by lenders last year.
Separately, the UK’s largest debt charity has welcomed new advertising codes introduced today.
The government-backed Consumer Credit Counselling Service (CCCS) says the new rules will make it more difficult for fee-charging debt management companies to mislead the public by advertising their services as “free”.
Hitherto the emphasis placed by some debt management companies on the provision of “free” help and advice has led indebted Britons to make contact without realising fees could be incurred.
The changes mean companies will be unable to advertise a product or service as “free”, “without charge” or similar, if the consumer has to pay anything other than unavoidable costs, such as response and delivery costs.
Recommending the work of debt charities, CCCS chairman, Malcolm Hurlston, comments: “Our research shows that clients on debt management plans with fee chargers, not only pay through the nose but also take a lot longer to pay off their debts.”