The Consumer Credit Regulations 2009 come into force from today (01.10.09).
Mr Aiyaz Sayed-Khaiyum said, “Notices have been dispatched in August 2009 and the Department of Fair Trading and Consumer Affairs has given enough time for credit providers and lending institutions to make necessary changes to operating procedures, to train staff and print new forms”.
The Attorney-General and Minister for Industry and Trade, says , “The Consumer Credit Act 1999 provides the legal framework for the provision of credit and ensuring that consumers or debtors are protected and allowed to make informed decision before entering into a credit contract”.
“This Regulation inter alia looks at the true cost of credit given to the consumers to provide a standardized form rather than having the alternative forms”, he said.
The 2009 Regulations also assist in the enforcement and implementation of Consumer Credit Act 1999 and stipulate in detail the operational aspects of the Act in three main areas.
These are:
(1) The manner of disclosure of information in credit contracts
Credit providers are required to provide detailed information to consumers on the terms and conditions of mortgages [section 10.3 (f)] of the Consumer Credit Act.
Form 2 of the Regulations 2009 requires credit providers to issue consumers an information sheet containing information on things consumers should know about the credit contract they are entering into.
Section 65 (3) on Changes on Agreement, credit providers should provide the debtor written information on any changes to the initial agreement, which include unpaid daily balances at the date of the notice, the amount by which the credit amount will increase, details of any changes to the annual percentage rate, etc.
For the purpose of Section 135 (2) credit providers must provide the debtor with particulars on the credit-related insurance contract , this include information on the insurance provider, kind of insurance, beneficiary under the policy, risk insured against, etc.
(2) Calculation of interest rates
Section 16 of the Regulations provides for the calculation of unpaid daily balances for a month, a quarter or half year by applying fraction of the annual percentage rate.
It states that the unpaid daily balance for each day in a month, quarter or half-year concerned must be added together and divided by the total number of days in the whole of that month, quarter or half-year.
(3) Various forms required under the Act
All disclosures and information provided to debtors must be in the form and conducted as prescribed in the Regulations and set out in the Schedule and Forms.
Sayed-Khaiyum has reaffirmed consumers that upon the commencement of the regulation, consumers will have accessibility to more information on consumer credit related issues and Department of Fair Trading and Consumer Affairs will continue being the most appropriate avenue assisting in such matters.