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Labour pledges law to cut credit card debt Labour pledges law to cut credit card debt
(35 minutes later)
Legislation limiting the amount of interest that can be charged on credit card debts is being promised by the Labour Party.Legislation limiting the amount of interest that can be charged on credit card debts is being promised by the Labour Party.
Under the changes, nobody would pay more in interest than they had originally borrowed.Under the changes, nobody would pay more in interest than they had originally borrowed.
Shadow chancellor John McDonnell says more than three million people are "trapped" by credit card debt.Shadow chancellor John McDonnell says more than three million people are "trapped" by credit card debt.
He will unveil the planned change in the law in a speech at Labour's conference in Brighton.He will unveil the planned change in the law in a speech at Labour's conference in Brighton.
Labour said the changes would work in a similar way to measures on payday loans, which came into force in 2015.Labour said the changes would work in a similar way to measures on payday loans, which came into force in 2015.
The Financial Conduct Authority has called for new measures to help people in "persistent debt" as a result of credit cards.The Financial Conduct Authority has called for new measures to help people in "persistent debt" as a result of credit cards.
The regulator says over three million people are in persistent debt, which it defines as having paid more in interest and charges than they have repaid of their borrowing over an 18-month period. The regulator says more than three million people are in persistent debt, which it defines as having paid more in interest and charges than they have repaid of their borrowing over an 18-month period.
Labour said its "total cost cap" would help "tackle the persistent debt spiral", claiming growing consumer debt was becoming a "threat to our economy".Labour said its "total cost cap" would help "tackle the persistent debt spiral", claiming growing consumer debt was becoming a "threat to our economy".
Unscrupulous lenders
Addressing delegates in Brighton, Mr McDonnell will say: "The Financial Conduct Authority has argued for action to be taken on credit card debt as on payday loans.Addressing delegates in Brighton, Mr McDonnell will say: "The Financial Conduct Authority has argued for action to be taken on credit card debt as on payday loans.
"I am calling upon the government to act now apply the same rules on payday loans to credit card debt."I am calling upon the government to act now apply the same rules on payday loans to credit card debt.
"It means that no-one will ever pay more in interest than their original loan."It means that no-one will ever pay more in interest than their original loan.
"If the Tories refuse to act, I can announce today that the next Labour government will amend the law.""If the Tories refuse to act, I can announce today that the next Labour government will amend the law."
UK Finance, which represents the financial and banking industry, said it was committed to responsible lending and that consumer credit was important for economic growth.UK Finance, which represents the financial and banking industry, said it was committed to responsible lending and that consumer credit was important for economic growth.
It added that "the last thing the industry wants is to see those who are most vulnerable being pushed towards the hands of unscrupulous and unregulated lenders".It added that "the last thing the industry wants is to see those who are most vulnerable being pushed towards the hands of unscrupulous and unregulated lenders".
When the FCA called for action in April, the UK Cards Association, which represents the major credit card providers, said the industry was "committed to helping the minority of cardholders who do not use a credit card in a way which is in their best interest".When the FCA called for action in April, the UK Cards Association, which represents the major credit card providers, said the industry was "committed to helping the minority of cardholders who do not use a credit card in a way which is in their best interest".
The Conservatives said action was already being taken to outlaw "rip-off credit card charges" and ensure companies help customers clear debt.The Conservatives said action was already being taken to outlaw "rip-off credit card charges" and ensure companies help customers clear debt.
Brexit row Risks
On day one of Labour's conference, the party's position on Brexit came under scrutiny as leader Jeremy Corbyn faced calls to keep the UK in the EU single market - and some MPs expressed anger as no motions on Brexit were selected for debate on the floor. The Bank of England's Financial Policy Committee warned on Monday that banks were "underestimating" the potential risks to their balance sheets from consumer debts that might never be re-paid in the event of an economic downturn.
Brexit Secretary Keir Starmer will speak in the auditorium on Monday, when he is expected to say the Tory approach to negotiations on leaving the European Union reveals the "post-imperial delusions" of Theresa May's party. It has highlighted longer interest-free periods on new credit cards, encouraging people to build up debts, as one of a number of developments that have contributed to a nearly 10% increase in unsecured lending at the end of last year.
Instead, he will promise a "democratically legitimate and economically sensible" approach. On day two of Labour's conference, the party is also warning that levels of student debt will reach a point where the current tuition fee system in England and Wales is no longer sustainable.
Are you affected by the issues in this story? Have you faced credit card debts? Email haveyoursay@bbc.co.uk with your experience. The Institute for Fiscal Studies has said seven out of ten students are unlikely to repay their loans in full given that, under the current system, any outstanding sums will be written off 30 years after they become eligible to be repaid.
Please include a contact number if you are willing to speak to a BBC journalist. You can also contact us in the following ways: Mr McDonnell said this was not tenable and a future Labour government would abolish fees.
Or use the form below "The number of people not paying their debt means that, I think, at the end of day some government, whoever it is, will have to intervene. We think it is better done now than it is in the future," he told BBC Radio 4's Today.
Labour, however, has insisted it has no current plans to write off existing student debt. The Conservatives say their opponents have backtracked after Jeremy Corbyn signalled action was needed to reduce the graduate debt burden during the election campaign.