The Government plans to bring a raft of previously exempted ads within the ambit of the Consumer Credit (Advertisements) Regulations 1989.
Topic: Credit
Who: Melanie Johnson, Consumer Affairs Minister, Department of Trade and Industry
When: Late November 2002
Where: London
What happened:
In Brussels, a major initiative is underway to review European Union consumer credit legislation. The UK's own Consumer Credit Act 1974 may well be replaced or substantially amended as part of the process. The related 1989 Consumer Credit (Advertisements) Regulations, which require advertisers who make any reference to credit to ensure that the advertising message is either "simple", "intermediate" or "full" in terms of the information it does or does not include, has also come under intense criticism in recent years for being over-restrictive and in many cases denying consumers information about credit deals which they would otherwise have found useful in making their purchase decision.
Two types of credit deals and ads which are not covered by consumer credit legislation or the 1989 ad regulations are credit deals other than mortgages on land which are for borrowings of over £25,000, and ads that state clearly that the credit in question is only available to a body corporate. Car ads offering credit deals for corporate purchasers, for example, are not caught.
The DTI's November 2002 announcement will sweep away the first of those two fundamental limitations. The £25,000 cap on the applicability of the Consumer Credit Act and the accompanying advertisement regulations will be swept away. As a result, many more credit agreements will be brought within the Consumer Credit Act consumer protection measures, such as the method of calculating the APR, the form and content of the relevant credit agreements, and the 1989 credit advertising regulations.
Why this matters:
Many advertisements offer loans well in excess of £25,000 and these are often aimed at consumers with low credit ratings who can be the most in need of the type of protection which is afforded by this legislation. Consumer Affairs Minister Melanie Johnson has also announced that removal of the cap will apply equally in the case of credit deals for partnerships of three or less as it applies to deals with consumers. Because of developments in Brussels, the plan is to postpone the coming into force of the £25,000 cap removal until the end of 2003 or early 2004, but for those who have been looking for a relaxation of the tight regime imposed on credit ads by the 1989 regulations, it looks as though these will be with us for a good few years yet!
