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28/01/2011
New Bill Of Sale Practice To Launch
The Government has announced today that the ‘Bills of Sale’ money lending industry will be working under a new Code of Practice.
Lenders will also provide customers with a plain English information sheet explaining how bills of sale work, and what the customer can expect from the lender.
A bill of sale is used to secure a loan on a consumer’s personal property, typically a car. Concerns were raised that this form of loan could lead to consumer harm. As a result, the Government consulted on whether any action was necessary.
Consumer Minister, Edward Davey, said: “It’s important that we clarify what’s involved in a bill of sale loan. There have been concerns in the past about how difficult they are to understand, so this Code of Practice and the plain English information sheet should provide more transparency on what a loan entails for both the lender and the consumer. I welcome the fact that the majority of the industry has already signed up to abide by this code.”
The Government felt that any ban could restrict consumer access to credit, reduce choice and push up prices. This could also potentially force some consumers into the hands of illegal lenders. It was also felt that it would be disproportionate to ban an industry because of a few rogue lenders.
Added consumer protections from the new Consumer Credit Act will come into force on 1 February 2011, and the OFT will monitor the industry under the Irresponsible Lending Guidance, which will have a positive impact on consumer rights for bills of sale loans.
(BMcN/GK)
Lenders will also provide customers with a plain English information sheet explaining how bills of sale work, and what the customer can expect from the lender.
A bill of sale is used to secure a loan on a consumer’s personal property, typically a car. Concerns were raised that this form of loan could lead to consumer harm. As a result, the Government consulted on whether any action was necessary.
Consumer Minister, Edward Davey, said: “It’s important that we clarify what’s involved in a bill of sale loan. There have been concerns in the past about how difficult they are to understand, so this Code of Practice and the plain English information sheet should provide more transparency on what a loan entails for both the lender and the consumer. I welcome the fact that the majority of the industry has already signed up to abide by this code.”
The Government felt that any ban could restrict consumer access to credit, reduce choice and push up prices. This could also potentially force some consumers into the hands of illegal lenders. It was also felt that it would be disproportionate to ban an industry because of a few rogue lenders.
Added consumer protections from the new Consumer Credit Act will come into force on 1 February 2011, and the OFT will monitor the industry under the Irresponsible Lending Guidance, which will have a positive impact on consumer rights for bills of sale loans.
(BMcN/GK)
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