Credit licence loss risk
July 30th, 2010 by Richard Aucock
CAR dealers who do not implement the European Consumer Credit Directive risk losing their credit licenses.
Car industry consultant rts says the deadline was due to be enforced last month.
It has now been extended to February 2011 – but car dealers who are not already working on implementing it could be putting their credit licenses at risk.
‘The new directive is significant and means dealerships will have to make changes to the way they enter into agreements with their customers, as well as the agreements themselves,’ said John Brannigan, MD of rts’s financial arm FIMTRAC.
“Rather than wait until the 2011 deadline we would urge lenders in the industry to start giving the additional rights to consumers as soon as possible.’
The ECCD, he said, gives more protection and rights to consumers. It’s not just something that covers the car dealer industry, but encompasses all firms offering credit.
Key changes include:
• Any advertising which talks about finance will need to carry additional information
• Lenders will need to provide more comprehensive pre-contract information
• Lenders will need to thoroughly check a consumer’s creditworthiness before entering into an agreement
Consumers will have a 14-day right to withdraw without having to give a reason. New provision is made to enable consumers to make early repayment of their loan.
Car dealers will thus need to review their processes, said Brannigan.
‘There will be a need for all dealership personnel involved with motor finance to be fully trained and knowledgeable in all aspects of the facilities on offer.’ All this will then have to be explained in layman’s terms to the car buyer.
Are you prepared for the onset of the ECCD?