Figures published by the Bank of England have revealed that personal debt increased by a record £10 billion last month.

A spokeswoman for the DTI told ePolitix.com: "A central part of the Consumer Credit Act review has been changing the rules to deliver a better deal for consumers who settle loans early.

"The current system is outdated and the formula used by many lenders to determine how much is owed always favours the lender as opposed to the consumer.

"The government wants to make it easier for borrowers to switch to better loan deals and ensure they have clear information about early settlement rules from the start of their loan agreements."

Forum Response: National Consumer Council

Diane Gaston, head of communications at the NCC, told ePolitix.com: "The figures released today serve as a wake-up call for both consumers and credit lenders. Offers of instant loans and easy credit are everywhere: they drop through our letterboxes, appear in newspapers, on television and even pop up on the internet.

"The message to borrowers is: beware of credit advertising deals that are rarely as cheap as they first appear. Low interest rates and easy access to loans can be a temptation to take out another loan, but people need to make sure that they can still pay off their debts if things go wrong such as unemployment or ill health.

"The implication for banks, building societies and other credit companies is: lend responsibly and stop bombarding consumers with offers of easy credit deals".

Forum Response: Consumers' Association

Laurence Baxter, senior policy adviser at the Consumers' Association, told ePolitix.com: "Tackling loan sharks who prey on those in financial difficulty is an important priority. One in five adults are affected by these loan sharks, costing our economy £16 billion per year, so after nearly 30 years it's about time something is being done.

"The most pressing task for the government is to establish a system of affordable financial advice to help consumers reduce their debt and plan for their financial future.

"Consumers' Association's proposals for a National Financial Advice Network is the only way to give consumers advice and help on a range of issues including debt and provide an accessible advice network to close the savings gap."

Forum Response: Barclays

A spokeswoman for Barclays told ePolitix.com: "The net rise in personal lending is largely due to a record monthly increase of £7.8 billion in mortgage lending and remortgaging for cheaper deals and equity release.

"This confirms a 'borrowing has never been cheaper attitude' and consumers should not rely on a continued increase in their property's value at the double-digit rates we have seen recently.

"Therefore, people should look at long term affordability and sustainability when using equity gains in their home to fund other expenditure."