Existing regulations prescribe how certain credit deal information is given consumers in ads and agreements. Now more regulations have been introduced that impose yet more pre contract disclosure obligations, even when it is not a distance sale. We disclose more at
Topic: Consumer credit
Who: UK Government
When: 31 May 2005
The Consumer Credit (Disclosure of Information) Regulations 2004 came into force with effect from 31 May 2005. These regulations impose new obligations on providers of consumer credit products to give up-front information and thus help consumers shop around. They do not apply to "distance contract" situations and will therefore be applicable in cases where there is some sort of face to face contract between consumer and credit product supplier.
The new regulations require that before a regulated credit agreement is made, the credit provider must, separately from any advertisement or credit agreement, disclose certain prescribed information to the prospective customer in a manner that is
- easily legible and where applicable of a colour which is readily distinguishable from the background medium upon which it is displayed;
- not interspersed with any other information or wording apart from sub totals of total amounts and cross references to the terms of the agreement;
- of equal prominence except that headings may be afforded more prominence whether by capital letters, underlining, larger or bold print or otherwise; and
- contained in a document which is separate from the credit agreement, is headed with the words "Pre-contract information", is on paper or on another durable medium which is available and accessible to the prospective creditor and is of a nature that enables the prospective creditor to remove it from the place where it is disclosed to him.
The prescribed information is the product information that is already required to be included in the credit agreement itself by the Consumer Credit (Agreements) Regulations 1983. This includes the total amount borrowed, the total amount repayable, the amount and frequency of repayments, the APR, the cost of any default penalties and examples of early settlement charges.
Why this matters:
These regulations form part of the Government's shake-up of the consumer credit industry, aimed at increasing transparency and improving consumer protection while minimising impact on business. Whether it materially increases the chances of punters taking the trouble to read about what they may be letting themselves in for remains to be seen.