Campaigns as Shadow Chancellor

Action Plan on Household Debt

Launching the Action Plan, Liberal Democrat Shadow Chancellor, Dr Vince Cable MP, said:

"The number of distressing stories relating to individuals who are unable to deal with high levels of debt is growing.

"So far the problems of personal debt have seemed manageable because interest rates have been low, house prices high and unemployment low. But this could change rapidly.

"It is deeply worrying that the relationship between debt and income is at an all time high and problems of debt servicing and extreme debt are growing.

"The Government has frankly been complacent on this issue.

"Today I am outlining 10 clear policies for tackling the ever-growing problem of consumer debt and the associated bubble in the housing market.

"The Government must urgently take action to improve economic stability and banking regulation so that such debt levels do not spiral out of control and consumers are clear on how much they have borrowed. There must be safety nets in place should the housing market collapse and many find themselves unable to pay their mortgages."

Lib Dem 10 Point Plan

Macro Economic Stability

1. House prices should be properly reflected in the official measure of inflation.

Consumer protection

2. The Financial Service Authority and the competition authorities should investigate the malfunctioning of the market for mortgage payment protection insurance and there should be greater transparency in the market.

3. Competition authorities must clamp down on hidden charges in credit and store cards.

4. Guidelines are required by the Financial Services Authority over non-income verified mortgages.

5. Greater debt information is necessary to prevent irresponsible lending and borrowing. There is no justification for continued government secrecy over student debt.

6. Rapid implementation of the Consumer Credit Bill will strengthen controls of loan sharking and stop unacceptable practices such as penalties for early repayment.

7. The government's Social Fund should be more flexible for more emergency, short term, repayable, credits to low income families in the event of an economic downturn and debt servicing problems.

Increased financial awareness and education

8. The financial regulator (FSA) should ensure that credit promotion and advertising have appropriate 'health warnings'.

9. The government should be actively working with the financial services industry to achieve a national role out of independent advice centres, providing financial health checks.

10. Financial education and awareness should be integrated into the national curriculum within maths and citizenship.

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Banking Report "Taking advantage of a Captive Market"

There is nothing inherently wrong with high profits when there is good performance in a strongly growing economy and profits being made from good performance in foreign markets. However, the Cruickshank Report in 1999 identified areas of "excess profit"- higher returns to capital than was justified by the risks being taken by the industry. In several areas, for example credit cards and business lending, excess profits were identified. These problems have still yet to be fully addressed.

This report highlights some areas where customers are not getting value for money including interest rates on savings, long cheque clearing times, charges on overdrafts and charges on British tourists abroad.

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