WA12

Government announces major consumer credit reform

Under new rules announced by the DTI, all consumers will have access to clear and detailed information about their credit agreements from lenders, before they sign up.

The move is designed to enable consumers to compare different credit agreements and to shop around for the best deal.

It forms part of the first set of regulations in the Government's shake-up of the consumer credit market, aimed at "increasing transparency and improving consumer protection while minimising the impact on business."

Specifically, the rules will:

- reform credit advertising so that consumers will be better able to compare products;

- introduce a standard way of calculating the annual percentage rate (APR) for credit cards, a key factor that consumers use to compare products;

- mean that when an APR appears in an advert, it will always have to be more prominent than all the other financial information;

- introduce a new signature box for consumers to sign if they are purchasing any additional insurance products, such as payment protection plans, on credit. This will work to highlight any extra costs.

The measures will apply to credit advertisements from 31st October 2004, and to all new agreements from May 2005.

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