Nov. 11 (Bloomberg) -- Prime Minister Gordon Brown pressed officials from banks and credit card lenders to curtail borrowing costs after a report showed that rates charged to customers rose even as the U.K. central bank lowered them.

A study of 240 credit cards by research group Defaqto Media Ltd. showed the average interest rate climbed 0.4 percentage points between May and November. Some lenders including NatWest, a unit of Royal Bank of Scotland Group Plc, increased their rate to 16.9 percent from 13.9 percent.

``We've got to bring the credit card industry in, to join with them and talk to them,'' Brown said at a press conference in London today. ``This new responsible approach to lending that I think the credit card industry wants to support will help households.''

Business Secretary Peter Mandelson met bank executives later, where they agreed to provide data that will let a government panel monitor their lending to business. The meeting is the latest effort by the government to press for lower borrowing costs after the Bank of England cut the benchmark interest rate to the lowest since 1955.

``It is critical we understand what finance is available for small businesses,'' Mandelson said in an e-mailed statement afterwards. ``This monitoring panel will give us greater insight into the situation at ground level.''

`Responsible' Lenders

Brown called on card lenders to ``establish clear and principles to apply to the cost people face on their existing debts.'' He asked them to engage in more ``responsible'' lending and to support people facing trouble servicing debt.

U.K. households borrowed 285 million pounds ($444 million) on credit cards in September, down a third from a year ago, according to Bank of England figures. The central bank last week slashed its key rate to 3 percent from 4.5 percent.

``Credit card companies are facing a number of threats to their income streams,'' said David Black, a banking consultant at Defaqto.

The government last week stepped up pressure on lenders to cut the cost of loans after banks including HSBC Holdings Plc said they're working to rebuild their capital and may not lower borrowing costs in lock-step with Bank of England reductions.

After pledging 50 billion pounds to rebuild the balance sheets of financial institutions, Brown's administration is under pressure to ensure that banks comply with the strings attached to the rescue money.

Bank Concerns

Banks say they won't pass on rate cuts because interbank lending rates remain high, indicating financial institutions are still conserving cash after recording losses and writedowns of about $691 billion.

``There are also one or two obvious flaws in this argument,'' Danny Gabay, direct of Fathom Consulting said in a note to clients today. ``The Libor market has all but ceased to function, so its relevance to actual mortgage rates is debatable and U.K. banks can now borrow directly from the Bank of England at much lower rates.''

The government is concerned that credit restrictions will force the closure of companies, boosting default rates and pushing up unemployment.

Brown said the code will be ``monitored carefully across the banking sector particularly to help small businesses meet their cash flow needs.'' He also pledged steps to ``reassure families'' so that homes aren't repossessed if they don't keep up with mortgage payments.

To contact the reporters on this story: Gonzalo Vina in London at gvina@bloomberg.net

Last Updated: November 11, 2008 12:44 EST