Over recent years, many people have been happy to take on more and more credit. Mortgages, credit cards, overdrafts, personal loans, store cards, store deferred payment schemes, mail order and hire purchase the list goes on. Credit cards have been especially significant. The size of the market has increased. Previously, when the Consumer Credit Act came into existence, Barclaycard was only credit card issuer. Now there are up to 1400 different cards available. However, the big five banks still own over 65 per cent of the market share. The personal loan market has also increased.

Research from various organisations has shown that consumers have difficulty shopping around and understanding credit. A government research paper in 2003 found 56 per cent of consumers do not understand the terms of credit agreements; 77 per cent find the language of advertising confusing; 62 per cent are not aware that many banks charge a fee if they wish to pay off their loan early.

The government is in the process of reviewing the 30-year old laws relating to consumer credit. The review of the consumer credit law is intended to strengthen the protection of consumers and create a fairer, more competitive credit market. This review process in the UK is being done in parallel with a similar process in Europe for the Consumer Credit Directive.

More specifically the review will aim to improve the regulation of consumer credit businesses by ensuring fair practices. Different types of consumer credit transaction will now be included by extending protection to all consumer credit. Rules governing credit licences will also be strengthened, putting debt management companies and rogue moneylenders under closer scrutiny.

Moneylenders will have to provide standard information when advertising financial products so that consumers can compare like-for-like and find the best deal. Small print will have to be enlarged to help people avoid getting "stung" with hidden costs and penalties.

The Office of Fair Trading will have the power to fine moneylenders and conduct surprise raids on debt companies who fail to follow the rules. Consumers will also have more effective options for resolving disputes.