Tag Archives: consumer
Consumer Credit Act in UK
Consumer Credit Act of 1974, Chapter 39 states that it is An Act to establish for the protection of consumers ~ new system, administered by the Director General of Fair Trading, of licensing and other control] of traders concerned with the provision of credit, or the supply of goods on hire or hire-purchase, and their transactions, in place of the present enactments regulating moneylenders, pawnbrokers and hire-purchase traders and their transactions; and for related matters. [31st July 1974]
Consumer Credit Act 1974 is a consumer protection law in the UK which requires certain businesses to obtain consumer credit licenses. This Act protects any individual who receives credit up to £25,000. All appeals under the Consumer Credit Act need to be made to the Office of Fair Trading. This Act governs personal loans and other credit agreements.
Gist of the provisions of the Consumer Credit Act 1976
Any business offering credit agreements must obtain a credit license from the Office of Fair Trading, attaining which your business becomes a licensed credit broker
The customer must be aware of all the details of the agreement including interest rates
Customers must be provided with the exact details of the transaction including cash purchase price, details on how the credit price works out, all the monthly costs and what the final cost of credit is
Consumer Credit Act 1974 requires:
All agreements will be in writing
Full written details of the true interest rate (APR) should be quoted
Cooling-off period (which starts on the day customer signs, it varies for different goods and services) should be allowed during which borrowers might change their minds and cancel agreements
How does the Consumer Credit Act 1974 protect the consumer?
Consumer Credit Act regulates all those who are involved in offering credit. It enables the consumers to gain a better understanding of the nature of the agreements they are getting into. Consumers tend to get lured by attractive interest rates and freebies offered by lenders but this Act enables the consumers to make the best informed choice.
Consumer Credit Act also controls and regulates the activities of those who can provide credit under this Act. It also incorporates what steps a lender must take in case of default. This is not just limited to banks but also traders who offer goods on hire purchase and the various transactions they undertake.
This Act lays down rules which covers the form and content of all agreements, credit advertising, method of calculating Annual Percentage Rate (APR) and the procedures which will be adopted in the event of early settlements, defaults or even termination.
Consumer Credit Act 2006
Consumer Credit Act 2006 is the most significant change since Consumer Credit Act 1976. Although it received the Royal Assent on March 30th 2006, the key implementation dates set out are 6th April 2007 and 6th April 2008.
The key changes to the Consumer Credit Law along with its implementation dates are:
Removal of £25,000 financial limit (6th April 2008)
New definition of individual (Late 2006)
Retention of £25,000 financial limit for business lending (6th April 2008)
New business exemption (6th April 2008)
Interest on default sums (6th April 2008)
Minimum standard of post contract information (6th April 2008)
Unfair relationships (6th April 2007)
Licensing (6th April 2008)
Financial Ombudsman Service (6th April 2007)
Consumer Credit Appeals Tribunal (6th April 2008)
Enforcing credit agreements (6th April 2007)
Consumer Credit Act assures protection o people who enter into credit agreements.
Senator Levin Prepares to Slap Around Abusive Credit Card Companies Who Are Ripping Off Consumers (Page 1 of 2)
Some of the Credit Card Companies offer a good product and decent service providing Americans with the convenience and back up of a credit card when not carrying a lot of cash on person. Much of the online business and other travel and such have to be conducted by some sort of plastic. Credit card possession and usage is a cornerstone of conducting business in the U.S. It creates fluidity to economic commerce. Now, however, many abusive credit card companies have ratcheted up the gouge game to a new level. Per a recent Senate Hearing on March 7, 2007, all prompted by U.S. Government Accountability Office (GAO) report, the abusive credit card companies have increased fees and interest rates. So when an abusive credit card company applies the butchers thumb on the scale, they have crossed the line as far as regulators are concerned. What seems to have been lost on these abusive credit card companies is the right to do business in the U.S. economy is a privilege, not a birthright. Their ticket to do business can be pulled through Federal Law and new legislation, just for good measure.
Jaw Boning in the past has given various businesses cause to pause while considering their actions less new restrictive legislation is laid over their operations and bringing another degree of complication to what seems like an already profitable enterprise. Baring that, legislation may follow. If nothing else, it brings unwanted negative attention to their methods and abuses. The abusive credit card company names will be bandied about creating negative press that may effect their future bottom line. It gives a broad-brush swipe at the industry, which is never a good thing.
The Government Accountability Office (GAO) reports there were about 690 million credit cards in circulation meaning credit card toting consumers have more than one card. The GAO is always measuring the past and in 2005 there was about $1.8 trillion on charge cards. Other agencies report that the average credit card debt is a little over $5,000 per household. The report shows that a little over 50% of the credit card holders pay off credit card balances every month. So on the whole, it looks like the majority of American families are not overburdened by credit card debt. Those families who are appear to be relegated to higher rates with some pretty outrageous terms. Things such as penalties and late fees range from $40 and up for making a late payment and other charges. In some cases this will trigger a higher interest rate if not paid on time. These interest rates can be more than 30% or more figured on an annual basis. Much of the government figures come from GAO and the banking industry.
A couple other hand grenades are known as the concept of universal default. If you are late on one card, the universal default provision will kick in and all the other cards will be accelerated to a higher rate. Another little time bomb is the practice upon a consumer being late there is invoked a double-cycle billing period where instead of having the 30-day grace period the interest goes back to the date of the previous bill and interest is popped on the former grace period. If this is combined with say a $40 late charge plus double cycle billing and perhaps the universal default provision suddenly a consumer is going under the gun. When the Bankruptcy Law was changed recently pushing more debtors into Chapter 13 Repayment Plan pretty much set up the stage for a quasi-indentured servant status. Working basically for the company store a consumer can not get readily ahead. Its almost like waving temptation in front of a credit-addicted consumer who looks at easy credit as being never ending. When the rubber finally hits the road and the final straw breaks the camels back and not one extra dollar is available to make even the minimum payments, then its Houston We Have A Problem. Prior legislation accelerated the payback minimum payment. Formerly, a $5,000 credit card balance might have had a $120.86/month minimum payment at 29% would be paid off in 30 years. Thats assuming no additional purchases were made. Now that the term has been reduced in the 60-month range so that minimum payment would have to be $158.71/month to give the consumer a chance to pay it off. However, if charges are added back by constant purchases there will never be a dent made in the debt.