The country’s financial watchdog has proposed a package of measures to help consumers who are facing high-cost credit charges.
One of the main suggestions is a cap on prices in the rent-to-own sector where the Financial Conduct Authority said essentials such as an electric cooker costing £300 could leave a customer with a £1,500 bill.
The FCA said it had “identified a need to intervene to protect financially vulnerable consumers in this market”.
Also for consideration on the table is a ban on the sale of extended warranties at the point of purchase, which the watchdog said could save consumers up to £7.7m each year.
It said it would also be consulting on reforms to bank overdraft charges, door-step lending and catalogue credit and store cards “to help customers avoid persistent debt”.
FCA chief executive Andrew Bailey said: “High-cost credit is used by over three million consumers in the UK, some of who are the most vulnerable in society.
“Today we have proposed a significant package of reforms to ensure they are better protected including the possibility of a cap on rent-to-own lending.
“The proposals will benefit overdraft and high-cost credit users, rebalancing in the favour of the customer.”
The watchdog argued the way banks operate and charge for overdrafts also needs “fundamental reform”.
In 2016 they raked in an estimated £2.3bn in revenue from overdrafts – 30% of which was from unarranged overdrafts.
It said it was considering several measures to make it easier for customers to manage their accounts including mobile alerts warning of potential overdraft charges and stopping the inclusion of overdrafts in the term “available funds”.
Beyond that, it said it would also consult on the radical option of banning fixed fees.
Mr Bailey added: “Our immediate proposed changes will make overdraft costs more transparent and prevent people unintentionally dipping in to an overdraft in the first place.”
The FCA has already taken action to curb credit card debt with a raft of new rules which firms have been given until 1 September to comply with in response to concerns about the level of unsecured debt.