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Shorn Of The Debt Responsibility
By: Rachel Lane

With UK personal debt spiralling out of control beyond the £1 trillion mark at a rate of £1 million every four minutes, and the number of declarations of bankruptcy on the increase, the Government has finally implemented measures to ensure lenders know the actual cost of any borrowing. Lenders have been placed under orders from the government to provide a wealth of information before any agreement loan is finalised. These measures mean that the amount borrowed, total amount repayable, amount and frequency of repayments, annual percentage rate, cost of any default penalties and examples of early settlement charges must all be set out at the pre-contractual stage, and prominently displayed on all loan agreements.

The consumer protection has also been extended to help reduce the burden on consumers wanting to repay loans early.

Minister Gerry Sutcliffe said the measures will make hidden payments and lack of clarity no more. This may be stretching things a bit, but at least it is a step in the right direction, and will hopefully be bolstered by the proposed Consumer Credit Bill (http://www.dti.gov.uk/ccp/creditbill/ ) currently navigating through parliament.
The stated aims of the Bill are:
• enhancing consumer rights and redress by empowering consumers to challenge unfair lending, and through more effective options for resolving disputes;
• improving the regulation of consumer credit businesses by ensuring fair practices and through targeted action to drive out rogues; and
• making regulation more appropriate for different types of consumer credit transaction by extending protection to all consumer credit and by creating a fairer regime for business.

The main culprit for the present debt situation however must be made to accept responsibility for their part in the problem. The simple fact and it is one that everyone knows, is that if you borrow money, you will eventually need to pay it back, usually with interest.

According to Callcredit credit agency, currently six out of ten Britons who have unsecured debts claim they are unaware of how much they owe. Eight out of ten of those questioned, could see no problem with having a head-in-the-sand attitude towards their own levels of debt and general personal finances. The government can only help implement schemes to protect consumers, but the problems will continue to get worse if the public is not willing to help itself by reading through legally binding contracts before signing them, or to seek-out the lowest loan rates by comparing providers using financial comparison websites like uSwitch, moneynet ( http://www.moneynet.co.uk/ ), Moneyfacts (http://www.moneyfacts.co.uk/). The financial information is freely available if you know where to look. Which? Magazine (http://www.which.co.uk/ ) has been campaigning for consumers’ rights since 1957 and the Financial Services Authority, which regulates the financial services industries, provides a wealth of information and guides on their site. The real root of the problem appears to be in current public attitudes, with the way consumers view their own personal finances, and until this is changed, debt in the UK will continue its awful spiral.

About the author:
Rachel writes for the personal finance blog Cashzilla:

http://www.cashzilla.co.uk/

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