UK Government Plans To Impose Tough New Rules On Credit Providers

by Robin Pilgrim, LawAndTax-News.com, London

21 February 2003

Speaking following the UK government's announcement of its plans for tough new rules governing the regulation of credit providers, retail financing expert, Ian Roberts told the Butterworths legal news service that the Consumer Credit Act 1974 has proved 'surprisingly' effective over the years, but needs updating now in order to cope with technological and other advances which have taken place.

'For instance, how do you enter into contracts online or deal with internet banking when you are required to send a paper statement,' he mused, continuing:

'If you don't you are technically in breach of the Act, although the authorities aren't taking action for technical breaches such as only providing statements online. However, being in breach of the Act can make agreements unenforceable.'

Among the changes proposed by the DTI, according to Butterworths, are: more stringent tests for companies looking to set up credit businesses, fines for companies which fail to comply with the new rules, more clarity over credit agreement terms, checks before credit card and loan limits are raised, and the provision of greater detail on exactly what is meant by 'sympathetic treatment' of customers in repayment arrears.

Predicting the likely reaction of credit providers to the government's plans, Mr Roberts observed that:

'Most of the major players in the market are highly reputable and spend an enormous amount of time and effort ensuring they comply with the Act, so they will welcome more stringent controls on rogue traders and loan sharks. However, it is important any new measures are applied sensibly and with discretion as there are always grey areas.'

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