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November 23, 2007

Banks told to come clean on loan danger

Filed under: business, finance, news — Tags: , , , , — ManInBlack @ 9:39 am

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Sweeping rule changes will force banks to stop lending huge amounts and get them to behave fairly.

A review of the Banking Code yesterday recommended that banks specifically agree to lend money responsibly. And they will also be told to let customers decide whether they want to accept an increase in their credit card limits.

In recent months banks have been accused of recklessly letting customers take on massive sums of money they would struggle to repay.

Under the new proposed rules, customers struggling with debts will also be told to pay off all their loans if they borrow money again.

And anyone signing up to a loan or savings account will get vital information about the product in an easy-to-read summary box.

This will contain details of interest rates, tax codes and bonuses for savings accounts.

And for loans, details of all charges, rates and early settlement fees will be included.

These are all great moves that could help you avoid debt get a free credit report. But the Banking Code could have gone further. It could have made banks and building societies announce when bonus rates on savings accounts ended.

And it should have forced banks to increase the minimum amount credit card customers have to pay each month.

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