Credit card firms under fire

'IRRESPONSIBLE' credit card companies must 'clean up their act', the UK's largest debt advice charity has demanded.

Citizens Advice, which gives money and legal advice through 2,800 bureaux, says major lenders are using marketing techniques that encourage reckless borrowing, regardless of a customer's ability to repay.

The charity's demands follow revelations this week of how an 84-year-old pensioner was allowed to rack up debts of £30,000 on 20 cards. Kate Purnell was allowed to borrow the money despite living in a rented mobile home and receiving a pension of just £76 a week. Meanwhile a Trading Standards official from Cumbria revealed how he was offered £1.7m credit from loan and card companies.

And last month, the Daily Mail revealed how a young father hanged himself to escape debts of £70,000 after becoming swamped by easy credit. Stephen Lewis, 37, earned £22,000 a year. He was allowed to take out 19 credit cards, running up around £50,000 of debt in interest, bank charges and insurance plans alone.

Speaking to a meeting in the City organised by the Association of Payment and Clearing Services, whose members include the 'Big Four' banks, Teresa Perchard, director of policy for Citizens Advice, said: 'We want to see more transparency in what is being offered and how it has been calculated with a fuller explanation of the terms and conditions as well as simple ready-reckoners to help customers work out of they can really afford to repay what they are being offered.

'All our research shows that it only takes a small change in circumstances for credit to turn into debt crisis. Individuals who are already over-stretched can be vulnerable to the promises of fast, easy cash from lenders.'

Citizens Advice has seen a 44% increase in new consumer debt enquiries in the last six years with bureaux now dealing with over one million new enquiries each year.

The charity wants the application process to take into account a customer's whole circumstances, with more transparency on interest rates and an end to 'payment protection insurance that does not protect'.