People should take advantage of new consumer rights - Davey
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Issued on 01 February 2011 - BIS
Consumers should take
advantage of new rights aimed at protecting them and encouraging
lenders to act more responsibly, Consumer Minister Edward Davey said
today as the EU Consumer Credit Directive came into force.
In tough times it is more
important than ever that people know their rights, and the Government
is determined that all consumers are aware of their entitlements coming
into force on 1 February 2011. The amendments to the Consumer Credit
Act will strengthen both consumer rights and lenders’ duties towards
their customers.
Under the new rules
customers will be able to have:
- Up to 14 days to cancel
new loan agreements;
- The option to make
partial early repayments on loans - at the moment borrowers are only
able to pay the full amount off early.
Lenders will now have
greater responsibility towards consumers and must:
- Give borrowers
standardised pre-contractual information to help them compare different
loans;
- Ensure borrowers
understand the detail of their particular loan; and
- Carry out a thorough
check on borrowers’ creditworthiness before any loan is agreed.
Edward Davey said:
“The implementation of the
Consumer Credit Directive will help strengthen a culture of responsible
lending. With new legal rights for consumers and greater responsibility
for lenders, consumers will be better able to take charge of their
money.
“But this is just one part
of the story. Looking ahead, we want to consider other ways to empower
consumers, creating the right environment to strengthen their choices
and giving business the room to innovate in response.
“Consumers should be able to
help themselves, provided they have the right help and information to
do so. We want to do more to promote these options as well as continue
to regulate as a last resort where necessary to provide a safety net
for the most vulnerable.”
These rules amend the
Consumer Credit Act, building upon existing protections to give extra
rights and standardised information for consumers.
Notes:
1. Guidance for lenders was published in August 2010 and can
be found here
http://www.bis.gov.uk/policies/consumer-issues/consumer-credit-and-debt/consumer-credit-regulation/ec-consumer-credit-directive.
2. A plain English explanation of the changes can be found
here:
http://www.bis.gov.uk/assets/biscore/consumer-issues/docs/r/10-1072-consumer-credit-directive-quick-guide.pdf
3. The 14-day right of withdrawal for loans does not cover
loans over £60,260, loans secured on land or loans to purchase land.
4. Definition of ‘creditworthiness’: this will vary depending
on an individual bank’s criteria and the particular circumstances of
the loan, but must be based on sufficient information, obtained from
the borrower where appropriate, and from a credit reference agency
(CRA) where necessary.
About the Author
© Crown Copyright. Material taken from the BIS Department for Business, Innovation and Skills. Reproduced under the terms and conditions of the Click-Use Licence.
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Article Published/Sorted/Amended on Scopulus 2011-02-02 00:37:35 in Business Articles
