Lenders could be blocked from charging a consumer more than the same amount they have borrowed in interest and fees, under plans put forward by Labour MP Stella Creasy.
Creasy, who is widely credited with pushing the Treasury to introduce caps on interest and fees paid charged by payday lenders, is now seeking to bring in similar rules for credit cards.
The MP for Walthamstow, along with three other Labour MPs, has signed an amendment to the Finance Bill calling for the changes, and is due before the Commons today.
“Today will be pushing government to learn the lessons of fight against legal loansharking and cap the costs of all credit and especially credit cards,” Creasy said on Twitter.
It comes hot on the heels of Credit Week, during which Sir Vince Cable used his speech at the Credit Summit to warn over the levels of indebtedness in the UK.
The Liberal Democrat leader expressed concerns that borrowing could return to crisis levels within five years.
“After 2008, lenders became more conservative for obvious reasons, and so did borrowers and the share of personal debt to GDP fell to about 133 percent in 2015. It’s worth noting that even after that very substantial contraction, it is still at historically high levels. What’s happened in the last three years is that personal debt as a share of GDP has started to rise again, and it’s now at roughly 140 percent and the projections are it will reach crisis-level of 155 percent around 2022/23.”
Cable warned the current trend is returning the industry to a similar territory it found itself in during the financial crisis.
“We need to acknowledge the significance of this,” he said.
Meanwhile, the Gambling Commission is considering banning the use of credit cards in betting.
In its report into the safety of online gambling, the regulator noted the use of credit cards “increases the risk that consumers will gamble more than they can afford” and it would “consider prohibiting or restricting the use of credit cards”.
The Commission’s report found that profits in the online gambling industry rose 10 percent in 2017 to £4.7bn, and more than nine million Britons gamble online.
Neil McArthur, Gambling Commission chief executive, said: “Britain has the largest regulated online gambling market in the world and we are continually looking for ways to make it even fairer and safer for consumers.
“The proposals we have announced today are intended to protect children better, reduce the risks to vulnerable consumers and build on the measures we already impose on operators to know their customers and intervene at an earlier stage before consumers experience harm.”
The proposals also have government support, with minister for sport and civil society Tracey Crouch, adding: "We are committed to ensuring the gambling industry is safe and sustainable. These proposals for additional regulations will strengthen the controls already in place and further safeguard children and vulnerable people from the risks of online gambling."