Getting loans on-line – UK consultation on credit rules

Among the proposals is one for a 14-day cooling-off period for loan products purchased on-line, which is consistent with the term required by a recent Directive on the distance marketing of consumer financial services which must be implemented in UK law by 9th October 2004, although the Government's proposals cover a wider range of contracts than those addressed by the Directive.

The consultation paper identifies four issues that need to be addressed in order to allow consumers to conclude agreements electronically:

1. making it possible but not mandatory to contract electronically;
2. revising existing legislation drawn up in the 1970s when credit transactions were all paper based but which still dictates the form of agreements;
3. clarifying the availability of electronic signatures for credit agreements; and
4. determining how to deal with cancellation rights and the current provisions for providing certain information and copies of agreements.

Melanie Johnson said:

"The current rules on cancelling credit agreements are complex and need to be simplified. The draft European Consumer Credit Directive currently states that all consumers should have the right of withdrawal from all credit agreements.

"My view is that all credit agreements should be subject to a 'cooling off' period of 14 days. But we will need to consider how we deal with issues such as the way in which the lender recovers money lent after the consumer has exercised a right to cancel".

Responses to the consultation should be made by 28th March 2002.

The 33-page consultation document can be downloaded from:
www.dti.gov.uk/ccp/consultpdf/eagree.pdf