Sunday, 30 November 2008

Ian McCartney M.P to work with Dood on Rate Cap proposal

Ian McCartney M.P today announced his intention to work with Debt on our Doorstep in order to develop a proposal to introduce a system of interest rate caps, which he will submit to the Chancellor, Alistair Darling, and Business Secretary, Peter Mandelson at the end of the week.

The announcement came during a live interview on the BBC's Politics Show, North West, in which Damon Gibbons, Chair of Debt on our Doorstep also took part.

The full show can be viewed from the following link, with the coverage from the North West starting 33 minutes in.

Saturday, 22 November 2008

Show your support for the 'London Declaration' on the Global Credit Crisis

London Declaratation on the Global Credit Crisis - all agencies urged to indicate their support by signing at

Text of the Declaration follows


On 13th November 2008, two hundred delegates drawn from twenty six countries gathered in London to discuss the global credit crisis. The conference recognised that taxpayers all over the world are now being required to foot a mounting bill to rescue banks and financial institutions. Yet, it is households who are feeling the worst effects of the meltdown in the global financial system. Consumers, who have been encouraged to take on excessive housing and consumer debt, are now struggling to avoid repossession and insolvency, savings and pensions are threatened, and unemployment is rising.

Our discussions were informed by the Council of Europe's Recommendation (Rec/(2007)8) concerning legal solutions to debt problems, which sets out a framework for Member States to#
  • Provide measures that will prevent over-indebtedness
  • Alleviate the effects of debt recovery, and
  • Rehabilitate over-indebted individuals and families

There was widespread support for the Council of Europe's framework at the conference, but also recognition that in many Member States the measures that were currently in place failed to take account of the crisis situation now facing households.
Delegates therefore supported the making of the following declaration

The London Declaration

We, the European Coalition for Responsible Credit, with the support of our partners around the globe, call on our governments, financial regulators, and central banks, to take immediate action to support households in financial problems and to work with us and other consumer and social agencies, academics, and the labour movement to establish a new framework for the governance of credit markets at the international, European, and national levels.

The current crisis is a product of the long term neglect of consumer interests in the credit markets and inadequate regulation of the financial services industry. Over the past twenty years we have witnessed the continued weakening of consumer protections in the name of supporting free and efficient markets. The failure of this approach in the credit market is now self evident. This is not a crisis borne from providing access to credit to low income groups, but it is a product of providing them with irresponsible credit products and failing to protect their long term interests in the market.
We call on all governments across Europe to
Improve help available to households in mortgage arrears, by
Establishing, with the financial services industry, ‘mortgage rescue funds’ for households that can be used to help borrowers restructure mortgages at affordable rates of interest over the next five to ten years
Providing courts with the power to halt the repossession of homes and to restructure mortgages by accessing ‘mortgage rescue funds’

Enhance court protection for borrowers with unsecured debts, by
Providing for borrowers to obtain, on their own application, a temporary moratorium on recovery action for up to one year, subject to judicial discretion
Preventing unsecured lenders from obtaining legal charges on homes

Ensure adequate provision of debt advice services by developing and implementing, with the active involvement of consumer and social agencies, a national debt advice plan. The plan should be developed following the commissioning of independent research into the demand for, and supply of, debt advice provision and current funding levels for advice services

Include a duty in bank and credit licenses obliging lenders to ensure people on lower incomes have access to responsible credit products, and which requires lenders to report in a standardised and public way on their performance in meeting this obligation
Improve governance of credit markets by actively involving consumers
Ensure that consumer and social agencies are represented on key policy making and supervisory bodies at the global, European, and national levels

Provide financial support to enable consumer and social agencies to participate in an ongoing dialogue with regulators and the financial services industry at the global, European, and national levels

Develop a quasi bankruptcy procedure for banks which instead of just applying the principle of "too big to fail" provides the intervening State with the right to replace management, to adjust claims and to protect public interest in failing financial institutions without harming the well-functioning of the bank's systems with regard to the markets. Public guarantees and subsidies to banks should be given only with the obligation to act responsibly towards consumers and to return the money after it is no longer necessary to keep the bank from failure.

Signed this 13th November 2008
Professor Udo Reifner
Chair, European Coalition for Responsible Credit

Responding to the Mortgage Crisis

With repossessions at their highest level since the housing market crash of 1991, and more than 30,000 people set to lose their homes on current trends before next April, a new report from the Centre for Economic & Social Inclusion argues that radical measures should now be taken to help hard pushed borrowers reduce mortgage payments and to improve court protection against repossession.

The report highlights the fact that the cost of mortgage repayments, relative to household income, has been steadily increasing since 2004. This has now been combined with a ‘de-coupling’ of mortgage rates from bank base rates as a result of the global financial crisis – causing the cost of borrowing to rise rapidly, a surge in arrears, and a rush to repossession by lenders who have also seen house prices fall dramatically.

Pointing out the more pro-active approaches now being taken by regulators in the U.S where ‘loan modification’ programmes are now being introduced to ensure no-one pays more than 34% of their income on mortgage repayments, Damon Gibbons, Head of Policy and Partnership at Inclusion, commented:

“Restoring mortgage affordability is critical to reducing the number of repossessions. There is a strong case for government to insist that banks introduce a mortgage restructuring scheme in the U.K in order to achieve this. The new UK Financial Investment Company should ensure it uses the £37 billion of taxpayer investment in Britain’s banks as a lever to achieve this.”
The full report is available here :

Transcript of speech to Transact Conference

A copy of the speech given by Damon Gibbons, Chair of Debt on our Doorstep, to Transact's National Conference on 21st November concerning the problem of credit dependency and the need for interest rate caps in the UK is now available from the following link

Sunday, 16 November 2008

Jim Devine M.P puts down Bill to limit interest rates

Jim Devine M.P (Labour, Livingstone) has put down a ten minute rule bill to limit interest rates on consumer credit contracts. The Bill is also supported by other Labour backbenchers including Jon Cruddas. First reading was on 12th November and details can be found here

We urge Debt on our Doorstep supporters to write to M.P's asking them to support Jim's bill.

Damon Gibbons, Chair, Debt on our Doorstep will also be speaking at Transact's National Conference on 21st November to debate the issue of interest rate limits. This follows a survey of Transact members last year in which rate caps came top of their list of measures that should be implemented in order to make a difference to people on low incomes.

Finally, GMTV begins two days of publicity tomorrow to highlight the costs of predatory lending by door to door (home credit) and payday lenders.