The Government today laid new rules in Parliament to protect borrowers.
These rules implement the European Consumer Credit Directive and will come into effect from 1st February 2011.
They will work in conjunction with the Office of Fair Trading’s irresponsible lending guidance for lenders which will be published shortly.
The new rules for unsecured credit agreements include:
- * a 14-day window for consumers to cancel credit agreements without penalty;
- * lenders will have to assess consumers creditworthiness before providing a loan;
- * lenders will have to clearly explain their products to help consumers make the right choices;
- * a right for consumers to make partial early repayment (this is in addition to the existing right to repay early in full); and * a standardised information form setting out important information details for consumers before they sign a credit agreement.
Consumer Minister Kevin Brennan said:
“These new rules will further strengthen a culture of responsible lending and borrowing whilst helping put consumers back in the driving seat with their finances.”
“The balance of power needs to shift back to consumers and these new rules will help them make better informed decisions before committing to any credit agreement.”
Notes
- Details of the new rules will be available from Office for Public Sector Information (OPSI) towards the end of w/c 5 April
- The ECCD rules will apply to unsecured credit agreements up to £60,260. The ECCD regulations will come into force in the UK as of 1 February 2011.
- Lenders will have from 30 April 2010 until 31 January 2011 to comply with the new provisions, but are encouraged to offer consumers the new rights as early as possible.
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