Credit Card Regulations, What Regulations?

Back in January I wrote a story, ‘New Year, New Regulations’ on the subject of anticipated legislation to tighten consumer credit regulation in the UK. What with all the excitement of a new British government, the World Cup, I'm a Celebrity back on the TV and the Royal Wedding announcement, here in the UK at least the vexed issue of Credit Card Regulation seems to have taken a back seat. We are still waiting for the first move from our new coalition government on this front.  I don’t know what  David Cameron and Nick Clegg do all day; sometimes it feels like they are more preoccupied with making cut-backs in Public Sector spending than in pushing for new credit card regulation.

 However,  legislative changes for Card Issuers which were drawn up by the Department of  Business, Innovation and Skills last autumn in it’s encyclopaedic report ‘A Better Deal for Consumers’, did appear on the OPSI (Office of Public Sector Information) website in April – just days before the government was thrown out by the General Election on May 6th. These regulations implement the CCD (Consumer Credit Directive, adopted by the European Commission back in May 2008). The Regulations make a number of amendments to the Consumer Credit Act 1974 (CCA 1974) and associated secondary legislation. These regulations implement an EU Directive on consumer credit. They enhance existing consumer rights on the provision of information before and during the life of a credit agreement. They also introduce certain new consumer rights in relation to credit agreements, such as the right to withdraw from an agreement within 14 days and the right to repay early in part at any time.

Since the appearance of this OPSI information back in April I have been hard-pressed to find any definitive pronouncements on how the directive will be followed up by the New Government; with little comment found in the business and finance pages of the main news providers or in the Blogosphere.

 But has this issue really gone away?  I doubt it very much.

OFT (Office of Fair Trading) continues to champion consumer rights in the UK and in March published guidance on behaviour it considers may constitute irresponsible lending under the Consumer Credit Act. The OFT guidance picks up where the BIS Report left off, and addresses each stage of the lending process, from advertising credit through to the handling of arrears and default on agreements.

It expects creditors to have respect the guidance and avoid irresponsible lending practices. For example, creditors should:

·         Not  mislead consumers when advertising, selling, or seeking to enforce a credit agreement

·         Make a reasonable assessment of whether a borrower can afford to make their repayments

·         Explain the key features of the credit

·         Monitor the borrower's repayment record during the course of the agreement and offer help if they appear to be experiencing difficulty

·         Treat borrowers fairly and with forbearance if they experience difficulties

In the wider arena of the EU, SEPA and the PSD continue to exert their influence, and the European Commission’s published programme of work for 2010 includes

·         A legislative initiative on short selling / credit default swaps.

·         Revision of the Market Abuse Directive.

·         Revision of the Capital Requirements Directive (CRD IV).

Credit regulation is still a hot topic in the U.S.A; Barack Obama’s crackdown on the banks continues to gather momentum, following his signing of the Credit Card Act of 2009.  For the typical US cardholder the new law means they are no longer faced with retro-active interest rate rises on existing card balances, have more time to pay off their monthly bills more notice of changes in credit card terms and the right to opt out  of significant changes of terms and conditions on their accounts.  This allows consumers time to shop around for better deals with alternative credit providers.  All of these changes in the U.S.A are being gradually phased in, but the majority came into effect in February 2010.