Personal Finance: Warm Welcome as Consumer Credit Regulations Get Transparent Treatment
New regulations aimed at shaking up the 30 year-old consumer credit laws have received a broad welcome.
The new rules, which were laid before Parliament, are designed to increase the transparency of the credit market and make it easier for people to shop around and compare products.
Under the move, consumers will be given clear and detailed information on credit agreements before they take them out, while charges for paying off a loan early will be limited to the interest for one month and 28 days, not two months and 28 days as is currently the case.
The regulations also include a tightening of advertising rules for credit products to make it easier for consumers.
A standard way of calculating credit card APRs, which refers to the rate at which interest is charged, will also be introduced, and when firms use an APR in an advert they must make sure it is most prominent.
Consumers will also have to sign a separate box if they want to take out additional insurance products alongside a credit card or loan.
Consumer Minister Gerry Sutcliffe said: 'This is all about transparency, enabling and empowering consumers to make informed choices.'
The changes to credit advertising will come in on October 31 and those relating to new credit agreements, such as the cap on early redemption charges, will come in from May next year. …