Banks 'hurt those in debt'

TUESDAY, NOVEMBER 28, 2006

[A report by the Treasury select committee has claimed Britain's poorest people are "financially excluded" and risk getting themselves into further debt to get bank accounts and loans.]

Britain's poorest consumers are at increased risk of getting into debt, a new report has warned.

According to a study released by the Treasury select committee on November 16th, increasing amounts of people are financially excluded from bank accounts, credit cards and mortgage loans.

Chairman of the Treasury select committee John McFall said: "Many of the financial services that most people take for granted are either not available to many of the most vulnerable in our society, or are only available at a premium.

"The burden of debt blights the lives of far too many people in our society."

As a result, these people are often faced with higher charges for loans and other financial services, the report claimed.

The news follows an announcement by First Direct on November 14th that it will charge current account customers £10 a month unless they earn at least £25,000 a year.

ClearDebt chief executive David Mond claimed: "If banks start to refuse to provide free accounts for people paying in less than £1,500 a month, more people will end up in the arms of unethical lenders.

"This is likely to make debt an even bigger issue for some."