The government's announcement of new credit laws this week has meant high street banks are racing to introduce guidelines.
The new rules, which come into force this autumn, will benefit credit card and personal loan borrowers by the introduction of tough new advertising regulations and an industry-standard annual percentage rate.
Banks however now have the task of explaining the cost of credit to borrowers. It all follows the House of Commons Treasury Select Committee decision to introduce more transparency.
The committee's chairman, John McFall, described the standardisation of APRs as the "first step towards giving the consumer a fair deal". Under the new regulations, the APR must be displayed more prominently than any other financial information.
"This is all about transparency, enabling and empowering consumers to make informed choices," says Gerry Sutcliffe, the Consumer Minister.
However, lenders have voiced surprise at the "tight timetable". A report by Datamonitor, the market research group, found that only one of the twenty leading banks was ready for the new rules.
In conclusion, it felt that lenders would consequently struggle to update procedures that could result in higher credit charges.
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