|UK CONSUMER POLICY - The UK Department for Business Innovation and Skills (BIS) releases its Consumer White Paper. This contains proposals on real help for vulnerable consumers; a new approach to personal finance; empowering consumers through better enforcement and information and modernising consumer law
|On 2nd July the Government published a consumer White Paper “A Better Deal for Consumers: Delivering Real Help Now and Change for the Future”.
A Better Deal for Consumers sets out the real help we are providing now to people in financial difficulties, and the longer term measures we are planning to bolster confidence.
The help we are providing for consumers now aims to help keep people in their homes, offer advice to those in debt, deal with sharp business practice and help vulnerable people cope with essential bills. Looking further ahead we set out a new approach to consumer credit that learns the lessons from recent events and aims to help consumers make better borrowing decisions.
Our consumer policy will be active in identifying and dealing with new consumer markets; proportionate in its approach to business regulation and concentrate resources on rooting out the minority of rogue businesses.
The proposals and actions in this White Paper will form the basis of a consumer policy that is able to adapt to change and help all consumers make informed and responsible choices.
You can read the full Consumer White Paper and accompanying documents below:
For info: In June 2009, the Government created a new Department for Business, Innovation & Skills whose key role will be to build Britain’s capabilities to compete in the global economy. The Department was created by merging BERR (ex DTI) and DIUS (to lead fight against recession and build now for future prosperity).
The Consumer White Paper “A Better Deal for Consumers” (July 2009) starts by saying how the government “will reshape consumer regulation to reflect the new ways we shop, so our regime remains one of the best in the world”. The White Paper focuses on four key themes: Real help now for vulnerable consumers; A new approach to consumer credit; Empowering consumers through better enforcement and information; Modernising consumer law.
REAL HELP NOW FOR VULNERABLE CONSUMERS
The last ten years have seen significant growth in levels of household debt, both secured and unsecured. There is evidence that consumers are starting to reduce their exposure to debt – the debt to income ratio fell by almost 10 percentage points during 2008. Nevertheless, significant numbers of people are struggling with the finances. The Government has taken urgent action at the macroeconomic level to support business during the recession, and has
also developed a programme of action for families and individual consumers.
Our key objectives in providing real help now for people in financial difficulties are to:
* Keep people in their homes
* Help people in difficulty with debt
* Tackle poor practice by business
* Assist vulnerable consumers to cope with essential bills.
To achieve this we are delivering:
* Help to support homeowners and social housing tenants in arrears, and better legal protection for mortgage holders and tenants
* ”Breathing space” relief for consumers overburdened with arrears on their utility bills and other unsecured debts
* A new debtors’ guide to help those with debt problems understand their options
* A new self-help debt advice toolkit to support debtors who want to negotiate repayment proposals with their creditors themselves
* A Money Guidance service in the North West and North East of England to help people make better financial decisions and avoid problem debt
* A new dedicated NHS helpline to offer healthcare support to those experiencing recession-related stress and anxiety
* Improved guidelines for health and social care workers to support people with mental health problems and overburdened with debt
* Reviews into how effectively energy and water suppliers protect vulnerable customers from disconnection and help customers with problem debt
* Swift enforcement action against debt write-off scams and against firms who exploit the vulnerable in debt
* Measures to ensure more responsible debt recovery practices by debt collectors and bailiffs
* Programmes to reduce household energy bills.
A NEW APPROACH TO CONSUMER CREDIT
Consumers have been seriously affected by the past two years of turmoil in the financial
markets. UK consumers currently owe around £1.4 trillion to banks and other financial
institutions. The vast majority of this borrowing is for mortgages on houses. However,
£230 billion is consumer credit, which includes personal loans, overdrafts, credit cards,
store cards and some other forms of specialist lending.
The Government is determined that we learn lessons from the experience of the credit
crunch and the past two decades and we will take decisive action now to improve the
regime for the future. We want to see a credit market emerge in a better shape, with
fairer outcomes for consumers, and contributing to, rather than potentially operating
against, wider financial stability.
This paper represents a new approach to consumer credit.
Our key objectives for the future are:
* Continuing access to credit for the most vulnerable in society to smooth income flows
* Fewer people taking on unsustainable amounts of debt
* Help for people to keep their finances on a solid footing
* Profitable businesses, which treat their customers fairly.
Actions to support these objectives include:
* A review of the regulation of credit cards and store cards, including a ban on the sending of unsolicited credit card cheques
* Ensuring consumers can access impartial support on choosing and managing credit cards and other consumer credit products
* Implementation of the Consumer Credit Directive, including new requirements on all lenders:
–– to explain their products to consumers adequately before they enter into a contract,
including the consequences of any failure to repay
–– to check the credit worthiness of consumers before they lend to them
–– to follow guidance from the OFT to tackle irresponsible lending practices
* A review by the OFT of high cost credit markets
* A continuing programme of reforms to make the credit market work effectively for consumers and lenders.
EMPOWERING CONSUMERS THROUGH BETTER ENFORCEMENT AND
Research by the OFT estimated that there were 26.5 million problems with goods and
services purchased in the year to April 2008, representing a loss of £6.6 billion to
consumers. Many respondents to the Consumer Law Review highlighted the need for
further support for vulnerable consumers taking action, and the need for a faster redress
mechanism for disputes involving small sums of money. Consumers also need clearer
information and better enforcement in order to take advantage of (and not be taken
advantage by) new and rapidly developing markets.
The Government’s objectives are to:
* Provide a new approach to enforcement which encourages responsible business to compensate consumers appropriately
* Ensure that those who enforce the law are equipped to deal with new ways of selling goods and services
* Improve the effectiveness of consumer education and awareness campaigns
* Provide a facility for collective actions to be taken on behalf of consumers, as a last resort to achieve compensation.
Actions to support consumers in a changing world include:
* A series of pilot projects to test the use of new powers to deliver compensation for consumers
* A new national strategy and specialist team for internet enforcement on consumer issues
* A central “Fighting Fund” to tackle rogues operating on a big scale
* A new Consumer Advocate who will co-ordinate work to educate consumers and be a champion for groups of consumers who have suffered a loss at the hands of a business
* A mechanism for consumers to get money back that has been recovered from overseas scams
* Support for product safety testing of imported goods at major ports
* Stronger penalties for rogue traders through new banning orders
* Simplifying the confusing array of sources of information and advice to ensure consumers can more easily find the support they need
* A new Consumer Rights Campaign.
Created: 06/07/09. Last changed: 06/07/09.
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