§ The Minister for Women and Equality (Ms Patricia Hewitt)I have today published a White Paper "Fair, Clear and Competitive: A Consumer Credit Market for the 21st Century", setting out the Government's proposals for reform of the legislation governing consumer credit. The White Paper sets out the conclusions of the review of the Consumer Credit Act 1974 launched in July 2001 and is based on extensive consultation with stakeholders.
72WSAs part of the White Paper package, I have also today published for consultation detailed proposals—including draft legislation—for changes to the rules governing the early settlement of credit agreements; the advertising of consumer credit; and the form and content of credit agreements. The consultation also sets out new proposals on the calculation of credit card APRs and on facilitating the conclusion of credit agreements by electronic means.
Britain has the most energetic and competitive consumer credit market in Europe. However, the legislation regulating it is almost thirty years old. Although it has generally stood the test of time extremely well, the credit market has developed to an extent never envisaged in the early 1970s.
The time is right for a thorough-going modernisation of the consumer credit framework; one that encourages and enables innovation and competition in the marketplace, yet still provides appropriate protection for today's consumers.
Credit has become an integral part of our daily lives. For many, it is the lifeline that enables them to deal with the emergencies that arise, helping match regular income against the irregular demands and risks of modern life.
But credit, of course, can also introduce risks of its own. Some consumers take out loans that are inappropriate and expensive. Others are tipped into debt by a sudden change in circumstance. But there are also consumers that are preyed upon by loan-sharks, whose activities often exploit the socially deprived sections of our community. It is simply not possible to escape from poverty if what little people have is asset-stripped by predatory lenders. And this White Paper sets out tough measures to police and crack down on loan-sharks and other such rogue lenders.
But it is also about providing consumers with the right information at the right time, so they can make informed decisions. Consumers need to be able to consider the key factors of a loan before they take it out. To do this they need clear, understandable information.
New protections will go hand in hand with a series of changes to promote a more open, competitive market, offering more choice and less restriction.
This White Paper proposes a range of legislative changes relevant to the credit market of today. It will be regulated in a way that provides consumers with choice, information and protection at the right time. It also outlines our plans for a strategic approach to minimising over-indebtedness and improving financial inclusion by educating consumers; providing easier access to financial advice; and ensuring access to affordable credit.
I have placed copies of the White Paper and other related documents in the Libraries of the House.