Stronger Protection For Consumers Borrowing Money
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Issued 23 Jul 2009
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
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.
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
· 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
· A new standardised pre-contractual information sheet enabling
consumers to compare offers more easily.
2. Information on the Consumer Credit Directive is available at:
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:
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
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 2009-07-23 19:16:14 in Legal Articles