Tough new legislation is needed urgently to control unscrupulous lending practices, Glasgow SNP MSP Bob Doris has today remarked. A report from Citizens Advice Scotland has revealed worrying levels of consumer debt.

Mr Doris said: "We all know that personal debt is at an alarming level but this report from CAB demonstrates just how bad it has got."

The SNP is calling on the Government to introduce legislation that would cap interest rates - a policy that has been in use in several European countries.

CAB Scotland’s report “Drowning in Debt” raises real concerns over the high levels of debt owed to high street banks and store cards or to catalogues as well as to doorstep lenders.

CAB Scotland’s research shows 88% of those approaching them for debt advice owed money to banks and building societies, with 65% owing money to other forms of consumer credit – from store cards to credit cards and 42% to informal doorstep lenders.

Mr Doris added: "Irresponsible lending has mushroomed under New Labour. The UK govt needs to now act to cap interest rates for these exorbitant lenders, many of whom are banks and building societies with  respectable household names.

"With the base rate at only 0.5%, rates of 30% on credit cards are common and some credit agreement range up to a shocking 300%. There is no relationship between the wholesale cost and the price to the consumer. It is the poorest who end up paying the most and so the debt spiral gets worse and worse.

"In Glasgow the problem is appalling. I have seen countless constituents who have had their lives blighted by debt.

"The Scottish Government is working closely with CAB Scotland to offer the best advice and support to those suffering debt crisis.

"What is ultimately needed is tough new laws to stop this blatant exploitation of the most vulnerable."

Notes:

The CAS 'Drowning in Debt' Report can be found here.

Interest rate Caps in Europe

Below are some examples of 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