Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether she has made an assessment of the potential merits of (a) restricting early repayment charges on debt to benefit customers and (b) encouraging early repayment.

While specific decisions around early repayment charges on loans are a commercial matter for lenders in which the Government does not intervene, there are rules that govern their use.

For mortgages, the Financial Conduct Authority rules set out that lenders should not impose early repayment charges at a level that is more than a reasonable pre-estimate of the costs that would be incurred as a result of a loan being terminated early. For unsecured credit, the Consumer Credit Act 1974 and accompanying regulations set out the requirements on firms where loans are repaid early.

Consumers should also be given adequate information about the existence of these charges in the pre-sale disclosure documents lenders are required to give them.