Dave Thompson MSP

As the UK Government outlines proposals which would force borrowers to pay back more of their debt earlier as well as stop issuers raising credit limits without consent, the SNP has also called for restrictions on the credit card market to include a cap on interest rates.

The UK Government is putting forward proposals which would prevent rates being changed, however Highlands and Islands SNP MSP Dave Thompson, a former Trading Standards Officer, is keen to see rates capped, as done in other countries around the world.

Mr Thompson said: "There is a constant concern over the level of interest some organisations charge for credit cards.

“This is not just the door to door lenders, but some reputable high street banks have been caught charging rates up to 30 times higher than the Bank of England rates.

“Today’s measures are a welcome step but they do not stop banks and lenders offering credit cards and loans at sky high prices.

“The system of rate caps works perfectly well in other countries who enjoy lower personal lending and fewer problems with debt and it's high time similar measure are introduced here.

SNP Treasury spokesperson Stewart Hosie MP added: “If we are cleaning up the banking industry then we have to crack down on credit card lenders as well.

“Personal debt levels in this country are alarming and for too long the balance has been against consumers. Of course individuals have a responsibility to manage their finances, but very often card companies impose confusing and complex conditions, and we need to put customers back in the driving seat. Introducing a cap on interest rates would be a common sense move that would go a long way in helping people manage their finances and get out of debt.

Notes:

Interest rate Caps in Europe

• Austria - 20%
• France 22%
  
• Germany 21%
• Italy 15%
  
• Switzerland - 15%

Examples of high interest lending products:

• Greenwood Personal Credit - APR of 399.7% offered on personal loans by Provident Personal Credit pre-paid debit card  - 189.2% APR
  
• Store Cards:  Store cards regularly charge interest of almost 30%, with 25% being the norm.
• Credit cards:  Credit card interest is on the rise, despite the base rate being at its lowest level for half a century.  Recent research shows the average rate of 17.6% - but for many customers the rate is far higher.  A Vanquis Credit Card, for instance, charges 40% interest