press releases

Press Release - 02/11/04

NEW CREDIT LEGISLATION TO HELP CONSUMERS WELCOMED - BUT BORROWERS SHOULD STAY VIGILANT, SAYS MONEYNET

THE unveiling of new consumer credit regulations - which came into force last weekend (31st October 2004) - are long overdue, says online financial data analyst Moneynet.co.uk.

But the new rules - which basically govern the advertising of credit by lenders and/or credit brokers and enforces how interest rates are displayed - will go some way towards minimising the risk of consumers racking up unsustainable debt, argues Moneynet chief executive Richard Brown.

"We welcome the new legislation, despite the fact that it has been a long time in coming," said Brown.

"From this weekend, any credit, store card, loans and any other form of lending which involves the notoriously complex APR system must be accompanied by a prominent positioning of Typical APR, which should bring less obfuscation to the issue of borrowing.

"I am especially pleased to see that the legislation includes guidelines for advertising products to those with adverse credit or where the consolidation of other debts is being suggested.

"For example, where credit is being offered for debt consolidation the following warning must appear:

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME

"Some may say it is a bit like putting loud warnings on cigarette packets, and it is not necessarily going to help people wise up to the dangers of over-borrowing at the inflated rates typical of some areas of the adverse credit industry.

"But it is a step in the right direction. Moneynet.co.uk has been campaigning for a more transparent approach to advertised interest rates since the company's inception back in 1997.

"We support anything that gives the consumer more clarity and protection. This is what Moneynet is all about and has been since its launch, when it was the first to provide the consumer with inter-active comparative information on financial products."

Summary of new FSA regulations for mortgage brokers effective from 31 October 2003

- consumers will receive clear information about both mortgages and mortgage services. This will allow consumers to more easily shop around. They will be able to compare mortgages more easily, and understand what service they are getting (including any fees that will apply);

- small print cannot be used to hide important information;

- price information (including the APR) in any mortgage advertising and marketing material must be clear, and any advantageous features of products quoted in advertising must be balanced by a description of any associated drawbacks;

- where giving advice, firms must ensure they offer the consumer a suitable mortgage;

- both lenders and advisers have to consider the affordability of any mortgage that they identify for individual consumers;

- charges must not be excessive - and any charge imposed where the consumer either repays early or goes into arrears must be limited to a reasonable pre-estimate of the costs arising from the consumer's action;

- new standards apply ensuring the fair treatment of consumers in payment difficulties or facing repossession; and

- higher-risk mortgages - lifetime mortgages - will be subject to additional requirements - both on disclosure and on the training and competence of advisers.

- mortgage firms will have to meet FSA high level standards for authorisation including capital, approved persons and PII cover.

PRESS ENQUIRIES

Richard Brown, Chief Executive, 0208 313 9030

David Andrews/Cathy Tully, David Andrews Media Ltd 07941 255855 / 01273 774109 / 07747196854

Consumer enquiries: info@moneynet.co.uk / www.moneynet.co.uk

Moneynet.co.uk is the UK's longest established online personal finance research and data analyst company. The company offers consumers a choice of thousands of low cost financial services products. From mortgages, personal loans to motor, home and medical insurance, credit cards, savings accounts and best buy fixed rate products, Moneynet is one of the most comprehensive online services of its kind in the UK. Founded by chief executive Richard Brown, the Moneynet brand is destined to become one of the UK's major players in consumer finance products.

A DAVID ANDREWS MEDIA LTD - RELEASE FEBRUARY 2005