Ministers reject loan rate cap

Ministers yesterday rejected calls to cap the interest rates that lenders can charge - despite admitting that high charges for people without a good credit record are a significant factor behind many individuals getting into debt.

Speaking at the launch of a package of government measures to counter over-indebtedness, at a conference organised by the IPPR thinktank, consumer minister Gerry Sutcliffe said he still favoured voluntary regulation of the industry rather than legislation to curb rates.

Several doorstep lending companies legally offer unsecured cash loans within Britain's poorest communities at rates often above 180% APR. Such rates, the conference heard, only exacerbate debt problems experienced by those taking out loans.

The government's strategy involves better education, more responsible lending, greater access to advice and more help for those who end up in court.

Teresa Perchard, the director of policy at Citizens Advice, welcomed the government's interest in the issue but said there was still a lot lenders could do to help.