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.