Better protection for consumers
New laws to protect consumers from rogue traders, lenders and debt collectors come into force today that should help people keep track of their borrowing more effectively.
The laws are the third and final part of the Consumer Credit Act 2006 and have been hailed as the biggest shake-up of the credit market for more than 30 years. New measures include offering legal protection to people who borrow more than £25,000 (previously, this level of borrowing was not regulated) and granting the Office of Fair Trading more powers to crack down on rogue traders and firms that don’t treat their customers fairly.
In addition, lenders will now have to take greater responsibility for the financial wellbeing of their customers, with new requirements to contact them if they go into arrears on loans explaining how it will affect their overall loan amount. Customers should also now find it easier to get information relating to their outstanding debt.
Credit and store card statements are also getting a shake-up, with providers now obliged to make it clear to customers the consequences of only making minimum payments.
The new laws are intended to not only offer better protection to borrowers but also to ensure that people on the brink of getting into financial difficulty can easily find the help and advice they need, through their lender as well as external sources.
As well as the new consumer credit laws, the Consumers, Estate Agent and Redress Act 2007 also comes into play from 1 October.
As a result, estate agents are now required to belong to an approved ombudsman scheme, making it easier for people to make complaints and receive compensation.
The Act also sees the launch of a new consumer representative, the National Consumer Council, which is made up of two former consumer watchdogs (energywatch and Postwatch). The new body will act as a consumer advocate with the government, regulators and industry sectors, and should make it easier for households to claim redress against energy and postal firms.
Finally, another new protection measure coming into force from 1 October means that consumers who buy from doorstep salespeople now have the right to cancel any agreements within seven days.
Previously, people who bought products or services, such as double glazing, orthopaedic furniture or new conservatories, from salespeople who visited them in their home had a seven-day cooling off period – but only if they hadn’t initiated the visit.
The new laws means any purchases over £35 can be cancelled within seven days, regardless of whether the salesperson ‘cold-called’ or not. Doorstep sellers will, therefore, be required to give customers the right to cancel in writing.
The new Doorstep Selling regulations have been introduced after an investigation by the Office of Fair Trading (OFT) found that 30% of people who bought from doorstop salespeople were not satisfied with their purchase. The OFT received 50,000 complaints last year relating to this type of selling practice, with the top complaints being about glazing products and gardening services.
Colin Brown, consumer policy director at the OFT, says: "These new regulations will mean that the law is a lot clearer for consumers. People buying goods in their own home now have a safety net of seven days in which to change their mind - regardless of who arranged the visit."
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
“Arrears” tend to be associated with debt. If you fall behind and miss payments on any outstanding debt, the amount you failed to pay is an arrear – the amount accrued from the date on which the first missed payment was due.