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Shorn Of The Debt Responsibility
By: Rachel Lane
With UK personal debt spiralling out of control beyond the £1 trillion mark at a
rate of £1m every four minutes, and the number of declarations of bankruptcy on
the increase, the Government has finally implemented measures to ensure lenders
know the actual cost of any borrowing. Lenders have been placed under orders
from the government to provide a wealth of information before any agreement loan
is finalised. These measures mean that the amount borrowed, total amount
repayable, amount and frequency of repayments, annual percentage rate, cost of
any default penalties and examples of early settlement charges must all be set
out at the pre-contractual stage, and prominently displayed on all loan
agreements.
The consumer protection has also been extended to help reduce the burden on
consumers wanting to repay loans early.
Minister Gerry Sutcliffe said the measures will make hidden payments and lack of
clarity no more. This may be stretching things a bit, but at least it is a step
in the right direction, and will hopefully be bolstered by the proposed Consumer
Credit Bill ( http://www.dti.gov.uk/ccp/creditbill/ ) currently navigating
through parliament.
The stated aims of the Bill are:
• enhancing consumer rights and redress by empowering consumers to challenge
unfair lending, and through more effective options for resolving disputes;
• improving the regulation of consumer credit businesses by ensuring fair
practices and through targeted action to drive out rogues; and
• making regulation more appropriate for different types of consumer credit
transaction by extending protection to all consumer credit and by creating a
fairer regime for business.
The main culprit for the present debt situation however must be made to accept
responsibility for their part in the problem. The simple fact and it is one that
everyone knows, is that if you borrow money, you will eventually need to pay it
back, usually with interest.
According to Callcredit credit agency, currently six out of ten Britons who have
unsecured debts claim they are unaware of how much they owe. Eight out of ten of
those questioned, could see no problem with having a head-in-the-sand attitude
towards their own levels of debt and general personal finances. The government
can only help implement schemes to protect consumers, but the problems will
continue to get worse if the public is not willing to help itself by reading
through legally binding contracts before signing them, or to seek-out the lowest
loan rates by comparing providers using financial comparison websites like
uSwitch, moneynet ( http://www.moneynet.co.uk/ ), Moneyfacts (
http://www.moneyfacts.co.uk/). The financial information is freely available if
you know where to look. Which? Magazine ( http://www.which.co.uk/ ) has been
campaigning for consumers’ rights since 1957 and the Financial Services
Authority, which regulates the financial services industries, provides a wealth
of information and guides on their site. The real root of the problem appears to
be in current public attitudes, with the way consumers view their own personal
finances, and until this is changed, debt in the UK will continue its awful
spiral
About the Author:
Rachel writes for the personal finance blog Cashzilla:
http://www.cashzilla.co.uk/ Rachel lives in Scotland and has the Best Hits of
1987 in her music collection.
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