I am supposed to be finishing an article on insurance for a lifestyle magazine but I have just received an email which has made me so mad I have to write to get it out of my system.

Kevin Mountford a supposed expert in banking has being spouting forth his views on the Liberal Democrats Consumer Manifesto. Specifically on the party’s plans to ban banks excessive profiteering on charges and to cap interest rates on store and credit cards.

Lets consider what Kevin says on banking first: He said:  “The Lib Dems know that bank bashing will be popular with voters, but the reality is that we have seen several high profile challenges by the Office of Fair Trading (OFT) on various ‘unfair’ charges and the industry has already come a   long way in resolving many of these issues.  There’s a trade off here because most customers run their accounts in such a way that they never pay these charges.  Perhaps the Lib Dems want to see all of us paying monthly fees to run our current accounts?”

OK, how has Kevin missed the OFT report in Personal Current Account? As I have said before it makes clear that THERE IS NO SUCH THING AS FREE BANKING IN THIS COUNRTY. The OFT makes clear that whether if is by being charged extortionate amounts for being overdrawn or by being paid derisory sums of interest on the credit balance in their account the fact is the majority of us already pay for our current accounts. Pretending otherwise is just a nonsense.

Turning to credit cards: Kevin said: “The introduction of a cap on interest rates on credit and store cards sounds attractive.  Again our concern is the unintended consequences – which could be that it will lead to a growth in financial exclusion.  With millions of people already excluded from mainstream financial services we are seeing a two-tier banking system, with consumers with excellent credit records being given preferential rates and products over those consumers with poorer histories who miss out on mainstream credit as a result. A cap on interest rates will actually exclude more consumers from the accessing affordable credit, and could possibly drive them to lenders who charge even higher interest rates. You cannot control pricing without impacting the supply of products.”

Umm yes, except once again there is a mountain of evidence to the contrary. Most recently The New Economic Foundation report. What’s more Kevin may be surprised to learn that many European countries and US states already cap interest rates on credit cards. What’s more in France where interest rates are capped at 8% above base rates more people from low income households have access to mainstream lending than in the UK – significantly more Kevin, go look it up.

It really sickens me to see such blatant tosh spouted out by a supposed “expert” when there is oodles of evidence showing that actually if you don’t exploit those on low incomes with high rates of credit then they are actually just as reliable re-payers as the rest of us. Look at the low default rates on loans made by credit unions if you don’t believe me.