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FLA delivers new rights for borrowers

FLA delivers new rights for borrowers

Category: Money

Updated: 14/12/2012
First Published: 01/02/2012

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Consumers are to benefit from new rights and protection for short-term loans and store cards.

The Finance & Leasing Association (FLA) says the new range of measures will protect borrowers in financial difficulty as well.

Known as the FLA Lending Code, the new rules will ban commission payments for staff selling store cards, while any benefits from taking a card, such as discounts or other offers, will not become available for seven days after it is acquired.

Lenders will also be required to ensure customers are aware of the total cost of a short-term loan (including charges and fees) before they apply.

Borrowers must also be told that these loans are not suitable for long-term borrowing.

A restriction on the number of times a short-term loan can be extended to a maximum of three will also be introduced, coupled with a requirement that a new credit assessment be carried out each time.

In addition, measures to help customers in financial difficulty and in particular those with mental health problems are also included in the new Code.

The rules will cover all members of the FLA, which provided £73 billion of new finance to UK businesses and consumers last year.

"The FLA Lending Code has been providing additional protection for credit customers for over twenty years," said Fiona Hoyle, head of consumer finance at the FLA.

"The new measures for store card sales and short-term loans reinforce the commitment of all FLA members to responsible lending."

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