Government rounds on loan agreement 'clarity'

The government has introduced new rules on lending, which will bring “a new level of clarity” to loan agreements.

Under the new rules, lenders will have to provide customers with pre contractual information, which will set out the main factors of the loan, such as the total amount borrowed and the amount that has to be repayed; the amount and frequency of repayments and APR. Lenders will also be required to display this information clearly on the loan agreement, as well as provide separate information on the agreement regarding additional payment protection insurance.

The new regulation also includes protection for borrowers who wish to settle loans early. Under the new rules, lenders will still be able to recoup some administration costs, but the burden placed on consumers repaying loans early will be reduced.

The new regulations follow the re-introduction to Parliament of the Consumer Credit Bill, which contains more changes to Britain’s consumer credit laws, which have not been reformed for three decades.

Commenting on the new regulations, Consumer Minister Gerry Sutcliffe said: “Hidden payments and lack of clarity are very unhelpful for people trying to manage their credit commitments, which is why we’ve brought in these changes.

“The pre-contractual information will help people shop around and make informed choices between the different products available to them and the new level of clarity on loan agreements will mean that no-one is in the dark about what they are signing up for.”

(KMcA/SP)