Borrowers 'protected' by new consumer credit rules

Wednesday, March 31st 2010

New consumer credit rules aim to protect borrowers and were revealed in parliament yesterday (March 30th).

Consumer Minister Kevin Brennan explained that the rules hope to encourage a culture where responsible lending and borrowing occurs.

"The balance of power needs to shift back to consumers and these new rules will help them make better informed decisions before committing to any credit agreement," he explained.

As part of the regulations, which will come into force on February 1st next year, the European Consumer Credit Directive will be implemented.

The plans include a 14-day period where consumers have the chance to cancel any credit agreements and do not have to pay a penalty for doing so.

Consumers' creditworthiness will also be assessed by lenders before they are allowed to offer a loan, the rules state.

According to the Department for Business, Innovation and Skills, the period between now and the implementation of the law gives lenders a chance to make any changes, but they can start to follow the new rules from April 30th this year.