The DTI's task force on overindebtedness has issued its second report.

Its research found that most families use credit modestly but about five per cent were heavy credit users.

The major cause of financial difficulties was loss of income - particularly job loss.

Forum Response: Council of Mortgage Lenders

A spokesman for CML told ePolitix.com: "Newly published research by the CML reflects some of the concerns of the task force about the levels of debt in the UK. Results of the poll conducted by MORI and published earlier this month by the CML show that 15 per cent of those surveyed used between a quarter and half of their income on debt payments, 11 per cent of people said that they had more debt than last year and five per cent said that they sometimes fall behind with their debts.

"In its report, the task force suggested a range of key indicators for use alongside lenders' credit checking systems to help assess affordability. We believe that these indicators are helpful for checking whether a borrower could be over extending themselves by taking on additional credit.

"Data shows that mortgage lenders continue to act responsibly to ensure borrowers are able to afford the loans being requested. In 2002, first-time buyers borrowed an average of 78 per cent of the value of their properties, representing 2.53 times their income, while people moving on to a second or subsequent home borrowed 64 per cent of its value and 2.34 times their income.

"For some time the CML has been committed to a sustainable home-ownership campaign also supported by the insurance industry and the government. We have been looking for as many ways as possible to protect borrowers from the risk of losing their homes.

"Mortgage arrears and possession have fallen to their lowest levels for 20 years. However, with the uncertain economic outlook it is important that borrowers are careful not to over commit themselves by taking on too much debt, and need to think seriously about how they would manage if interest rates rise or their income falls."

Forum Response: Barclays

A spokesman for Barclays told ePolitix.com: "Barclays welcomes the recommendations by the overindebtedness taskforce and the increased focus on this area.

"Barclays takes its roles as a responsible lender extremely seriously. It is not in the interest of our customers or our business to lend money to people who cannot afford to repay. We will not lend to customers if we believe that borrowing is not the best decision for them, even if it means we lose market share.

"Barclays is one of the biggest contributors to free independent money advice, donating more than £5.6 million over five years through the Money Advice Trust, the National Debtline and the Consumer Credit Counselling Service.

"If our customers are in financial difficulty, Barclays is keen to help and assist. We would encourage them to come and talk to us at the earliest opportunity. We offer personal customers experiencing repayment problems a range of options, depending on the individual circumstances.

"Debt is not the same as over-indebtedness. Credit and debit cards are a part of the way people lead their lives. The true picture of consumer debt in the UK is less alarmist than the headlines would have us believe. Credit is a growing part of day-to-day life. Borrowing is a useful tool to help people manage their outgoings."

Forum Response: National Consumer Council

Frances Harrison, head of policy research and development at the National Consumer Council, said: "A stricter licensing regime must be implemented speedily so reckless lending and other sharp practices are clamped down on and punished. Helping people better understand the pitfalls of credit, and government commitment to rein in irresponsible lending, are especially welcome.

"NCC would like to see credit reforms taken one step further with the adoption of a general duty on lenders, debt collectors and other credit businesses, not to trade unfairly. This would give the Office of Fair Trading the power to put an immediate 'stop' on any business caught trading unfairly."

Forum Response: Associations of Payment Clearing Services

A spokesman for APACS told ePolitix.com: "APACS welcomes the second report of the task force on over-indebtedness.

"Both the minister and the task force recognised that the UK credit market is one of the world's most competitive. As the report states, very few consumers face financial difficulties, and most financial problems are not related to over-use of consumer credit.

"Nevertheless, the UK credit industry remains committed to helping the small minority of those who do experience financial problems in a sympathetic manner. The industry already supports debt advice organisations, such as the Consumer Credit Counselling Service and National Debtline, and will continue to work with them to promote a greater public understanding of the consequences of over-indebtedness.

"We agree with the minister's conclusion that the small minority of rogue traders should be encouraged to comply with the rigorous industry standards followed by the majority of lenders. Moves to implement many of the proposals in the report have already been initiated by credit card issuers.

"We will continue to work with the Department of Trade and Industry in its review of the Consumer Credit Act to ensure that the regulations governing the UK credit industry are in the consumers best interest and appropriate for today's competitive marketplace."