Gordon Brown recently met the Which? team at the ‘Listening to Consumers’ event, hosted by Which?. This event gave frontline advice agencies and consumer groups the opportunity to tell the Prime Minister about the impact the recession is having on the lives of ordinary people.
We asked the Prime Minister what he is doing to help consumers.
Which? readers are worried they are not getting income from their savings. What would you say to them?
‘As you know, we created the individual savings account to help savers. We want to be in a position to ensure that people get value from the investments and savings they have made. It would be a terrible problem if high inflation was allowed to erode the value of savings, so we want to keep inflation low and throughout the last few years we have been determined to do that.
‘But in a period when interest rates are low this is an issue and we keep looking at what we can do. I appreciate the worries that people have.’
What do you feel you can do on mortgages to ensure that lenders do pass on interest rate cuts?
‘We have been determined to persuade building societies and banks to pass on, where they can, the cuts in interest rates but if interest rates are low and remain low then it has an effect on the interest rate that banks will then pay on the savings that are deposited with them, so we have got to get the balance right. We have got to help savers and we have got to help mortgage holders.’
What are you doing to ensure that banks treat consumers fairly if they have arrears on their mortgage?
‘We have negotiated with banks and building societies at the top end of the market a six-month moratorium (giving consumers who are unable to make their monthly mortgage payments more breathing space) but we have also brought in new advice for the courts that repossession should be the last resort not the first resort.
‘The judge has got to be satisfied that everything possible has been done to avoid that, including an offer of spreading the payments over a longer period of time or putting more on the capital sum and less on the interest payments.
‘The final part of this will be having an insurance scheme in place where we can help people spread their payments over a longer period of time and underpin that.’
What are you doing to control irresponsible lending by credit card firms?
We are prepared to legislate on this matter. There are two issues that have concerned us: one is unsolicited credit card cheques, which are an invitation to run up more and more debt, and the second is the practice of raising people’s credit card limit without even telling them – that is an unsolicited way that people are invited to get themselves into more debt. We are going to deal with some of these practices.
What are your own experiences of working with consumers?
‘You may not know this but for a very brief period of my life between being a lecturer at university and a Member of Parliament, I spent some months editing a consumer programme, and at that point we were trying to ensure that people got the benefits to which they were entitled.
We were dealing with thousands of letters where people were raising their complaints … people want an answer – they want to know what has happened. Sometimes it is not the answer they wanted, but they still want to get an answer.’
Are banks and savings account providers clear enough about the terms and conditions they offer?
‘We are having to restructure the banking system for the future. The rules that are going to be in place are going to be materially different from where we were before.
‘We are trying to persuade banks to adopt new practices, for example on remuneration, on the way they treat risk and on the way they treat liquidity.
‘We will be bringing in new rules in these areas, but of course the most important thing is that the consumer gets the best of service and that is something that with our involvement in the banks we are determined to ensure.’
What will the government do to bring about longer term reform of the energy market?
‘A key part of our work is to make sure that the energy markets work fairly for consumers. That why we’ve been pushing so hard with Ofgem to stamp out unfair practices – wherever you live and whatever payment method you use, you should not be treated unfairly.
‘The overcharging of vulnerable customers that Ofgem found is completely unacceptable, and we think that tough regulation is the quickest way to end the unfairness. If the regulator and the suppliers can’t stop the unfair practices we’ll use legislation.
‘Separately, we’ve been calling on companies to pass on cuts in international energy prices to their customers as fast and as far as possible.
‘All six of the big energy companies have now cut prices.
‘We’re also aiming for seven million homes to get insulation and low carbon heating supplies by 2020.’
We have had a lot of questions from readers about the cost of credit – for example, with interest rates so low, why is borrowing so expensive and how can credit card companies justify putting their rates up?
‘What we are trying to do is get the banks to sign up to better codes of practice. Lloyds TSB has issued a code of practice, RBS is doing similar things. My greatest worry at the moment is people at the bottom end of the market and what we can do to protect people against unscrupulous lenders who are exploiting the difficulties people face. We are looking at what we can do about this.’
Gordon Brown’s comments on…
the obesity crisis…
‘… we want to stop the increase in obesity in under 11-year-olds – if we don’t do anything, on current projections, nine out of 10 of today’s children will be obese when they are adult…’
‘… we know that this is a problem we can solve because it is about small changes of behaviour – walking more, cycling, eating a bit less, eating better…’
advertising to kids…
‘… as a result of the action we’ve taken there are now fewer adverts on TV that are trying to persuade children into bad eating habits. We know we must be careful this doesn’t just move to other types of media…’
being a parent…
‘… I know what it’s like for parents trying to get their kids to eat five fruit and veg a day – we all do our best but it’s not always easy – so the industry must play its part in reducing children’s exposure to the promotion of food which is high in fat, salt or sugar…’
‘… people will be offered home energy advice, and the chance to have what we’re calling “whole house treatments” that could be paid for through a financial package that should mean overall savings on their energy bills from day one…’
To find out what else the Prime Minister had to say, watch our video clips from the ‘Listening to consumers’ event.
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