MP warns credit industry on debt

Conservative MP Michael Fallon has urged the financial sector to do more to prevent irresponsible lending.

Speaking at an ePolitix.com fringe meeting at the Blackpool conference, he said it was "perfectly possible to have too much competition and too much regulation".

But he warned that politicians could be forced to intervene if regulators and the industry itself do not take a tougher line with market abuse.

Household debt has now reached 150 per cent of income, said the Treasury select committee member.

"I think, yes, there is a problem," Fallon warned. "The market is working imperfectly."

He also said there could be "more and more regulation" unless the sector acts to "put its house in order".

The Financial Services Authority (FSA) should also be acting to encourage greater market transparency, said Fallon.

"It shouldn't  be left to the Treasury select committee... to do this."

He added that more could be done to improve financial awareness among consumers, especially through the education system.

Unless action is taken, he said, "you'll end up with more bad laws" as MPs respond to public pressure.

John Bushby, vice president for Northern Europe at Mastercard, said the industry was taking measures to address the problems.

He added that work was underway behind the scenes to put in place systems that would help prevent irresponsible lending.

And FSA director Michael Folger said his organisation was also increasing its spending on education.

But the school system could have a much greater impact on consumers than one agency, he noted.