Government announces protection for loans

Fri, 24 Jul 2009

The government yesterday (July 23rd) launched a new set of draft regulations which is hoped to ensure more responsible lending when it comes to personal loans and credit cards .

As part of the Consumer Credit Directive, lenders will now have to make thorough checks of potential borrowers' 'creditworthiness' and fully explain the details of the personal loans to ensure understanding.

A 14-day withdrawal option will also be made available to personal loan customers to give them time to revoke their decision to take out credit if their circumstances change.

The move is intended to make personal loans more transparent and help consumers avoid debt .

Kevin Brennan, minister for consumer affairs, said: "These changes will build on the real help we're already providing for homeowners, savers, pensioners and people with debts ."

Financial institutions are frowning upon personal loans which are unsecured in the current economic climate, according to a recent Moneyfacts report, which showed that the AA, Direct Line, Goldfish and Virgin Money have all stopped offering the risky products.
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