BERR launches consultation on European Consumer Credit Directive

The Government today launched a consultation on the European Consumer Credit Directive.

The Directive aims to protect consumers, offer them new rights and set out common standards across the EU in relation to a range of unsecured credit products.

The provisions to be consulted on include:

* A 14-day right for consumers to cancel any credit agreement without penalty.
* A standardised information form setting out important information for consumers before they sign a credit agreement.
* Lenders will have to explain their products to help consumers make the right choices.
* Lenders will have a responsibility to check consumer's creditworthiness.
* A consumer right to make partial early repayment (this is in addition to the existing right to repay early in full).

Consumer Minister, Gareth Thomas, said: "We want to further promote responsible lending and responsible borrowing. These measures will help with that objective.

"It's important we hear the views of consumer groups and the credit industry to ensure that we improve consumer protection whilst taking into account the practical concerns of business."

The consultation will close on 10 June 2009. To contribute, visit: http://www.berr.gov.uk

OFT consults on financial services strategy review of unsecured consumer credit market announced

The OFT has launched a consultation on its proposed financial services strategy which sets out its approach to the sector in response to the current economic crisis. The OFT is asking interested parties to comment on its proposal to focus on two inter-related themes:

* The prioritisation, in the short term, of promoting fairness and responsibility between the credit industry and consumers, and

* advocating choice and competition to ensure that public decisions made to deal with the current crisis do not harm competition in the long term to the detriment of consumers.

The strategy also announces that the OFT is to conduct a review of the unsecured credit market. The financial crisis has led to significant changes in this market and the review will focus on the fair treatment of consumers and on ensuring that this key driver of economic growth works effectively.

John Fingleton, Chief Executive, said:

'Much of our work is already aligned with the needs of consumers, business and the economy in the current crisis but this strategy will sharpen our financial services focus over the coming year.

'With our focus on credit, we are addressing the area in which there is a real risk of short-term consumer harm while also ensuring that the sector that emerges from the current crisis is competitive and behaves fairly and responsibly towards consumers. 'Looking further forward, the financial services sector that emerges should be characterised both by effective prudential regulation and open markets. Choice and competition involving existing players and new entrants are vital to delivering growth, prosperity and a good deal for consumers. There is a risk that this could be overlooked in the re-design of financial regulations, with high costs for consumers and the economy.'

The consultation will run until 12 June 2009. A final Financial Services Plan, taking account of consultation responses, will be published in July 2009.