Banks face ban on unsolicited loans in crackdown

BANKS are to be banned from offering unsolicited loans and from increasing credit card limits without the say-so of their customers in a shake-up of the finance industry.

The Financial Regulator yesterday unveiled new consumer laws which will give greater protection to customers and also force banking, insurance and investment firms to offer customers only the right services for them.

The Financial Regulator’s code, due to become law in July 2006, will mean, for instance, that debt consolidation firms will have to spell out the financial pros and cons of using their services. And banks and other finance firms will only be able to increase credit card limits if the customer specifically asks.