---

Dept of Trade and Industry

Answer

Helen Southworth: To ask the Secretary of State for Trade and Industry what steps she is taking to ensure that customers taking out credit agreements have clear, comprehensive and understandable information on (a) interest charges, (b) other charges and (c) penalties. [196391] Mr. Sutcliffe: The White Paper "Clear, Fair and Competitive--The Consumer Credit Market in the 21st Century" set out the Governments' plans to increase the quality and transparency of information available to consumers about the costs and other terms of credit at all stages in the contractual process. To that end, Regulations have already been made governing the advertising of consumer credit; the provision of pre-contractual information; and the form and content of credit agreements. The Consumer Credit (Advertisements) Regulations 2004 which came into force on 31 October this year-- require lenders to present a balanced picture of the costs of a product; and establish the typical APR as the prime comparator. The Consumer Credit (Agreements) (Amendment) Regulations 2004 will require lenders to disclose full details about interest and other charges in the credit agreement. Penalties are illegal under consumer credit law. Interest charges will need to be listed under the prescribed "Key Financial Information" heading. Other charges will need to be listed under the "Other Financial Information" and "Key Information" headings. The Consumer Credit (Disclosure of Information) Regulations 2004 require the lender to provide similar information in advance of the agreement being made. Both of these Regulations come into force on 31 May 2005. The Government have also announced their intention to introduce a Bill as soon as parliamentary time permits that will include proposals to require creditors to provide debtors with regular information about the state of their accounts throughout the life of the agreement, including: providing an annual statement showing the activity on the account for the previous 12 months for fixed term agreements of more than one year in length; providing information about sums in arrears when the debtor gets into arrears for all forms of credit (e.g. loans and credit cards); providing information about fees, charges and interest applied to the account where there is a default; and providing debtors with information sheets published by the OFT and setting out user-friendly and relevant information about managing debt issues and seeking advice with all arrears and default notices. It is proposed that a failure by a creditor to provide the required information may mean that the creditor cannot enforce the agreement or recover interest in respect of the period of their failure.

Secondary information

Type

Written question

Reference

196391; 426 c587-8W

Session

2003-04

Subjects

Consumers Credit Fees and charges Information Interest rates

Link

View this Written question on www.publications.parliament.uk