Consumers taking
out new deals on credit and store cards and personal loans are set
to benefit from enhanced protection.
The Department for Business has today published proposals for
draft regulations to take forward the implementation of the
Consumer Credit Directive.
These include new requirements to promote responsible borrowing
and lending, as set out in the recent Consumer White Paper.
Lenders will have to check consumers’ creditworthiness before
they borrow, and fully explain financial products. Consumers will
also be allowed a 14-day period within which to withdraw from
credit agreements.
The finalised regulations will implement the requirements of the
Directive to provide transparent, standardised information -
helping consumers compare products, including the cost of credit
on offer.
Consumer Affairs Minister Kevin Brennan said:
“These changes will build on the real help we’re already
providing for homeowners, savers, pensioners and people with
debts.
“Lenders will have to check creditworthiness and provide the
information consumers need to make properly-informed decisions
before they sign an agreement. Consumers will also have a new
14-day period within which they can opt out if they have second
thoughts.”
The provisions are being published in draft form to allow experts
to provide feedback on their effect. The intention is for new laws
to be introduced by the end of the year – well in advance of the
Consumer Credit Directive coming into force in June 2010.
Notes to Editors
1. The following will be new introductions to UK credit law:
· A duty on the lender to provide adequate explanations about the
credit on offer to the consumer.
· An obligation on the lender to check creditworthiness before
offering or increasing credit.
· A requirement to automatically disclose information to
consumers of the identity of credit reference agencies holding
information which has led to a consumer's application for
credit being rejected.
· A right for consumers to withdraw from a credit agreement
within 14 days, without giving any reason.
· A new right to make partial early repayment of credit (in
addition to the existing right to repay early in full).
· Requirements for credit intermediaries to disclose fees they
charge for arranging credit and to make clear whether they are
tied to specific credit providers.
· A new standardised pre-contractual information sheet enabling
consumers to compare offers more easily.
2. Information on the Consumer Credit Directive is available at:
http://www.berr.gov.uk/whatwedo/consumers/consumer-finance/ec-directives/page29927.html
3. Earlier this month, the Government published its proposals to
promote responsible borrowing and lending in its Consumer White
Paper A Better Deal for Consumers - Delivering Real Help Now
and Change for the Future. For more information go to: http://www.berr.gov.uk/whatwedo/consumers/consumer-white-paper/index.html
4. The Department for Business, Innovation and Skills (BIS) is
building a dynamic and competitive UK economy by: creating the
conditions for business success; promoting innovation, enterprise
and science; and giving everyone the skills and opportunities to
succeed. To achieve this it will foster world-class universities
and promote an open global economy. BIS - Investing in our future
Contacts:
BIS Press Office
NDS.BIS@coi.gsi.gov.uk
Ben Lloyd
Phone: 020 7215 5974
Ben.Lloyd@berr.gsi.gov.uk