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POSTILLION Management Bulletin:
New Regulations have been introduced recently
to tighten up credit advertising to enable consumers
to be more able to compare products, to introduce
a standard way of calculating the Annual Percentage
Rate (APR) for Credit Cards and other credit arrangements,
and to introduce an additional signature for consumers
to confirm the purchase of additional insurance
products, such as payment protection plans, on
credit. In addition, excessive charges for settling
an agreement early will be replaced with a new
fairer system, under which the lender will also
have to set out three representative examples
of how much it would cost a consumer to settle
a loan early.
Consumer Minister Gerry Sutcliffe said:
"This is all about transparency, enabling
and empowering consumers to make informed choices.
Credit is an integral part of our lives. If used
properly, it can be a very useful tool. But lending
and borrowing must be clear, open and responsible.
"These reforms ensure that at every step
from the moment a consumer considers using credit,
to when they sign on the dotted line, right through
to when the agreement ends, they will have the
fullest information possible about how much they
need to pay and for how long, enabling business
and consumers to make responsible lending and
borrowing decisions."
The changes will apply to credit advertisements
from 31st October 2004, and to all new agreements
from May 2005, in order to allow businesses time
to change their processes before the changes come
into effect.
Bill Jones
POSTILLION Business Management Support
Tel: 01494 451239
Independent Advice and Support
Executive Associate, Institute for Independent
Business
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