For the benefit of consumers

In the past two years the government has worked tirelessly to secure foreign direct investment and to increase jobs. We have succeeded in both. Now, consumer affairs are back on top of our agenda.

Our priorities include the establishment of an authority aimed to promote fair trading and enhance consumer protection. The ball has been set rolling by the publishing of new regulations concerning consumer credit that provide for more protection for the consumer.

The Consumer Credit Regulations, 2010, transpose the European Directive 2008/48 and will replace the current Consumer Credit Regulations of 2005. The aim of the directive is to facilitate the emergence of a genuine internal market in consumer credit and at the same time guaranteeing a high level of protection for the consumer.

Agreement on the new regulations was possible after wide-ranging consultations with all stakeholders that were held within MEUSAC and that were led by the Consumer and Competition Department. These will come into force on October 1 and they apply to agreements covering credit for consumers, where the total amount of credit is more than €200 and less than €75,000. However home loans fall outside their scope and these shall continue to be covered by the current regulations.

In the interest of strengthening consumer protection, the new regulations provide for the information that must be given to the consumer at the pre-contractual stage. Amongst the items to be specified are the type and the duration of the credit, the borrowing rate, the annual percentage rate of charge and the amount, number and frequency of payments to be made by the consumer.

The consumer is entitled, upon request, to be provided with a copy of the draft agreement free of charge. This gives the consumer the possibility to take away the information and, prior to concluding a credit agreement, consider the obligations and rights arising therefrom and particularly consider the cost of the credit. It also enables the consumer to compare offers and take an informed decision. Moreover, a creditor must provide adequate explanations to the consumer on the credit offered in order to enable him to determine how the agreement may affect his economic situation.

The regulations also make provision for the information that must be specified at the contractual stage. The agreement must be drawn up in writing or on a durable medium. During the term of the contract, consumers are entitled to be informed of any changes in the borrowing rate.

Less extensive information requirements are required with respect to overdrafts and specific credit agreements.

Consumers have also been granted the right to standard information in advertising with regard to the costs of the credit facility in a clear, concise and prominent way by means of a representative example. This should help consumers to compare offers.

Of great significance to the consumer is that these regulations provide for the right of the consumer to withdraw from the credit agreement within 14 days of its conclusion without giving any reasons. When the consumer exercises the right of withdrawal concerning a contract for the supply of goods or services, the consumer does not remain bound by the linked credit agreement. The right of withdrawal does not apply to credit agreements which by law are required to be concluded before a notary public.

The regulations also give the consumer the right to early repayment, subject to the right of the creditor to a fair and objectively justified compensation for costs directly linked to early repayment and so long as the early repayment falls within a period for which the borrowing rate is fixed. The regulations provide for the rules for calculating this compensation. Of importance for the consumer to note here is that no compensation is due to the creditor for an early repayment which does not exceed €3,000 within any period of 12 months.

The consumer is also entitled to terminate an open-end credit agreement free of charge at any time unless the consumer and the creditor have agreed on a period of notice.

An important obligation imp-osed on creditors is the obligation to assess the creditworthiness of the consumer. This is in line with the principle of reasonable lending.

The regulations also make provision for the obligations of credit intermediaries.

The enforcement and monitoring of these regulations shall be the responsibility of the Director of Consumer Affairs within the Consumer and Competition Department.

The government is adamant to continue strengthening its focus on consumer issues and my intention is that in the coming months we will strive to improve consumer protection in the area of home loans as well.

Dr Said is Parliamentary Secretary for Consumers, Fair Competition, Local Councils and Public Dialogue