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Subject: Consumer Credit, Consumer Credit Act, Review of the Consumer Credit Act. Relevant or Related Legislation: Consumer Credit Act 1974 (CCA) Current PositionEnsuring responsible lending is a central plank of the Government’s work on developing a fair, clear and competitive consumer credit market. A key priority is to provide consumers with the information that they need at an appropriate time to allow them to make informed financial decisions about their borrowing, in a competitive credit market. In order to achieve this, we set out in the Consumer Credit White Paper – published December 2003 – the most ambitious programme for the reform of consumer credit law, since the Consumer Credit Act came into force more than 30 years ago. A number of significant changes have already been made, including the introduction of regulations on advertising and on the form and content of pre-contractual material agreements. However, more remains to be done. The Consumer Credit Bill www.dti.gov.uk/ccp/creditbill/ which is presently before Parliament, will further strengthen consumer protections and create a fairer, more competitive credit market. Among the changes that the Bill introduces are a new unfair relationships test to replace the old extortionate credit test, a significant strengthening of the licensing regime and an alternative dispute resolution scheme. Enquiries Further information
is available from the review website: Relevant ConsultationsFor the most recent
consultations see: Frequently Asked Questions (FAQs) Q1. What is the
Government doing to ensure consumers with debt problems are able to
access advice?
The Government is particularly concerned to ensure that consumers are able to access timely and appropriate advice. We have been working closely with the free debt advice sector to improve its capability and capacity to deal with clients. We have worked with the credit industry to introduce sustainable and increased funding. Increasing capacity is obviously a vitally important part of this work, and we have been developing with the free debt advice sector and credit industry a Gateway to free debt advice services, particularly telephone-based services. The Gateway will direct consumers to the most appropriate service for their circumstances, reducing pressure on already overstretched services. Alongside this, the Financial Inclusion Fund announced in the 2004 Pre Budget Report, included £45 million for the expansion of free face-to-face debt advice in England and Wales. Work is currently underway to spend this money and details can be found on the DTI website at http://www.dti.gov.uk/ccp/topics1/overindebtedness.htm - face2face.
The issue of Chip and PIN cards is an important one for the UK in terms of reducing the problems associated with plastic fraud.. For more information on Chip and Pin fraud you can visit Home Office website on http://www.homeoffice.gov.uk/, or http://www.crimereduction.gov.uk/cpindex.htm Chip and PIN itself, whilst already prevalent in many other countries, is an initiative by APACS (Association for Payment Clearing Services), who are the industry trade body for the credit card market. APACS, the UK Payments Association Body have undertaken a full consultation about the use of Chip and PIN cards. Views were sought from a range of parties including disability groups. Chip and pin and disability APACS advise that anyone who has a disability and thinks they may have difficulty with Chip and PIN (because of their impairment) should talk to their card issuing company who will discuss their options with them, which includes continuing to use cards with signatures or other arrangements which these customers currently have in place. APACS have been in full consultation with various disability organisations throughout the development of Chip and PIN – these include the RNIB, RNID and SCOPE. A number of measures have been agreed to ensure that consumers who suffer from disabilities are not adversely affected by the new system, in particular that consumers with disabilities can simply go into their appropriate branch and have their new Chip and PIN card changed so that it will simply require a signature as normal. For more information, contact APACS at Mercury House, Triton Court, 14 Finsbury Square, London EC2A 1LQ: telephone 0870 420 3208 (website http://www.apacs.org.uk/), or contact the charities mentioned above direct.
Interest Rate Ceilings or Caps, prevent the interest rate on credit products from rising above a certain level. However, the Government is not persuaded of the benefits of introducing interest ceilings for credit products of any type. Potential problems include situations where interest rates may gravitate towards the ceiling, causing detriment to consumers and competition.
As part of the reforms of the Consumer Credit Act 1974 we will be strengthening the test for a licence under the Consumer Credit Act and making it easier for consumers to challenge unfair credit agreements. The court will be able to look at all of the circumstances of the relationship, including the manner in which the loan was sold and the way it is later administered.
Credit is a useful tool enabling consumers to spread their spending at difficult times or when unexpected expenses arise. As such, it is important that all consumers have access to fair and affordable forms of credit. It is also essential that both lenders and borrowers act responsibly. In December 2003, the Government published a White Paper “Fair, Clear and Competitive: the Consumer Credit Market in the 21st Century”, outlining a package of reform of consumer credit legislation. The aim of the reforms is to increase transparency and fairness, enabling empowered consumers to make informed financial decisions in a competitive credit market. As part of those reforms we will be strengthening the test for a licence under the Consumer Credit Act and making it easier for consumers to challenge unfair credit agreements. In considering whether an agreement is unfair, regard will be had to whether the lender acted responsibly in providing the credit.
Credit Reference Agencies are an important part of the credit market and enable lenders to assess whether an individual has the ability to repay any credit that is offered. There are three main agencies; Experian, Equifax and Callcredit. The agencies hold full details of an individuals credit history, from bank accounts to credit cards. This information is held under the Data Protection Act and subject to all its regulations. However, it is possible for an individual to see ones credit file. A leaflet entitled No Credit? Available from the Office of the Information Commissioner, details how to contact the Credit Reference Agencies, how a copy of your credit reference can be obtained and how to have erroneous information amended. The leaflet is available from the Office of the Information Commissioner by calling 0870 600 8100 or on the Internet at http://www.informationcommissioner.gov.uk/. The leaflet also explains how a copy of your credit reference can be obtained and how any erroneous information can be corrected.
The Department of Trade and Industry is purely the regulatory body for the Consumer Credit Act and is not the enforcement agency. As such we are not able to comment on specific disputes. The best course of action would be to speak with your local Citizens Advice Bureau, who can advise on how to proceed. Citizens Advice have trained financial and legal advisers that can assist with your situation. (The local CAB can be found by reference to a consumer's postcode on this website: www.nacab.org.uk) If your complaint is against a bank or building society, you may also wish to contact the Financial Ombudsman Service (FOS). The FOS was set up to help settle individual disputes between consumers and such firms. They can consider complaints about a wide range of financial matters – from insurance and mortgages to savings and investments. The FOS is completely independent and its service is free to consumers. You can contact the FOS consumer helpline on 0845 080 1800 or write to them at:
Or access the website at http://www.financial-ombudsman.org.uk.
If you would prefer not to receive unsolicited offers of credit, you can register with the Mailing Preference Service (MPS). Companies who send direct mail are required to check their mailing lists against the MPS register and will not send unsolicited mail to you if you have registered. MPS can be contacted at www.mpsonline.org.uk/mpsr or by telephone on 020 7291 3310. Enquiries on consumer credit licensing should be referred to the Consumer Credit Licensing Bureau, Office of Fair Trading (OFT), Fleetbank House, 2-6 Salisbury Square, London EC4Y 8JX (Tel: 020 7211 8000; Fax: 020 7211 8800, Website: www.oft.gov.uk)
Credit card cheques are an additional facility on credit card accounts. They are usually provided as an additional instrument to a credit card and to some extent are similar to normal bank account cheques (and can be used in the same situations). Concern has been expressed that some consumers may not be aware that using a credit card cheque is not exactly the same as using a credit card. For example, consumers may end up paying more in interest and penalty charges than they realised at the time. Also that the same level of protection does not apply to purchases made with a credit card cheque as compared to a credit card. To address these concerns, a DTI consultation will take place between November 2005-February 2006. The consultation will consider whether more needs to be done to ensure that consumers are fully aware of the consequences of using a credit card cheque. http://www.dti.gov.uk/ccp/topics1/consumer_finance.htm
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