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An independent ombudsman will be give
the power to oversee consumer disputes over credit agreements
under the reformed credit rules, in an attempt to avoid
costly and drawn out court proceedings.
This is a new government proposal within
the Consumer Credit Bill, reintroduced into Parliament
on Thursday and replacing the Consumer Credit Act 1974.
The Bill went before the House of Commons
yesterday and is an attempt to curb so called ‘rogue-lenders’.
Addional propsals within the Bill makes
it easier for consumers to argue against unfair lending
practices and loan agreements, while creating a new requirement
for lenders to provide consumers with clearer information
about their credit accounts.
Consumer Minister Gerry Sutcliffe says:
“The consumer credit market was last reformed 30 years
ago, and since then it has changed immeasurably.”
He says while credit can be a useful
tool for most, unfair lending and ill-informed borrowing
decisions can potentially create a major problem for individuals.
“This Bill is an important step towards
achieving our objectives of creating a fair, clear and
competitive consumer credit market, and enhancing consumer
protection, particularly for the most vulnerable,"
he says.
Its reintroduction follows its mention
in the Queen' Speech earlier this week which said “consumer
credit law will be updated to provide greater protection
for consumers and to create a fairer, more competitive
credit market”.
The Consumer Credit Bill was previously
taken to the House of Commons in December in an effort
to improve the country's lending measures and consumer
protection.
The Bill also enhances the powers of
the Office of Fair Trading and allow the government department
to take action against rogue companies be imposing financial
penalties and enforcing a more targeted licensing system.
The OFT has welcomed the reintroduction
of the Bill in its attempt to modernise consumer credit
law.
Sir John Vickers, OFT chairman says:
“We welcome the Government's recognition of the importance
of reform to consumer credit legislation through today's
re-introduction of the Consumer Credit Bill. This will
help the credit market function more effectively, benefiting
borrowers and fair dealing lenders.”
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