§ Valerie Davey
To ask the Secretary of State for Trade and Industry how he will make the mortgage market more transparent for the benefit of consumers. 
§ Mr. Byers
Consumers need clear and comparable information about loan offers so they can identify the best deal. I shall be working with my right hon. Friend the Chancellor of the Exchequer on a package of measures to bring greater clarity, comparability and fairness to the marketing of mortgages and other types of credit.
We will shortly specify the way in which the Annual Percentage Rate (APR) for low-start and discount mortgages is calculated to require it to reflect the interest and total charges throughout the entire life of the loan. This will ensure that lenders advertise these products on a basis which will permit consumers to compare more easily the cost of one offer with another.
In the next two months, we shall also consult on proposals to limit the circumstances in which interest rates other than the APR can be shown in credit advertisements and pre-contractual information to those in which alternative interest rates give information which is of real use to consumers in choosing between products.
We are also consulting on a proposal to require warnings such as "Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it" to be shown in all pre-contractual information. This change will ensure that such warnings are included in brochures, pre-contractual letters and other documents which set out details of loan offers. If we implement this change, we shall remove the requirement for such warnings on advertisements between programmes on radio, television and cinema where they seem to be less useful for consumers.
We will shortly implement an EU Directive which requires only one formula to calculate the APR to be used throughout the European Union. This will enable consumers to make easy comparisons between different loan offers from lenders throughout Europe.
We will also extend the scope for bodies in addition to the Director General of Fair Trading to take injunctive action under the Unfair Terms in Consumer Contracts Regulations 1994. Regulators, including the Financial Services Authority, as well as consumer bodies will receive these powers.
Over the next year, we will consult on further measures to improve consumer protection.
I am concerned that the current provisions on extortionate credit in the Consumer Credit Act 1974 do not adequately safeguard vulnerable consumers against 264W the charging of unjust interest rates. DTI has commissioned research on which we shall base proposals to improve consumer protection in this crucial area.
We will also consult on a proposal to change Regulations on the terms on which loans are settled early, and to ensure that consumers know before they take out the loan the terms on which they can settle it. We propose to replace the Rule of 78 with a simpler formula which will be fair and equitable for consumers in a range of circumstances. We also propose to require reasonable indications of the terms of early settlement to be given in pre-contractual information so that consumers have another measure with which they can compare offers.
We will also review the regulation of credit advertising with the aim of making the regulations simpler and more sharply focused on requiring informative and truthful advertising.
Finally, we shall review the practice of exempting named mortgage lenders from the requirement to make regulated agreements under the Consumer Credit Act.