The Government is failing to protect consumers fully with its Consumer Credit Bill, warn credit information experts.
The Bill, which began its second reading yesterday in the House of Lords, seeks to update the 30-year-old Consumer Credit Act.
However, experts at checkmyfile.com, the UK's first internet-based credit reference agency, warn that the Consumer Credit Bill does not deal with longstanding issues, such as giving consumers the right to be told a reason for credit refusal.
The Bill does tackle problems identified by the Government, such as forcing credit providers to make their deals more transparent, tackling loan sharks, providing a way for consumers to report unfair practices, and helping to tackle over-indebtedness.
Barry Stamp, joint managing director of checkmy file.com says that while the Bill does provide for improved credit licensing, it misses the opportunity to help consumers become more fully informed about credit and to be more fairly assessed.
"The Consumer Credit Bill does nothing to extend the current legal requirement upon lenders which must state the name and address of any credit reference agency consulted, giving an unintentional reference that the agency has declined the application, which it has not", Mr Stamp adds.
The Bill also fails to make provision to make lenders use data from all three credit reference agencies rather than just one, meaning that decisions on credit applications continue to be made on a small subset of a consumer's financial situation, rather than on the whole picture.
Two in three credit card applications are declined, the applicant often having no idea as to why. Although credit card 'stealth charges', which sting consumers for late payments or going over-limit, must now be displayed more prominently, the Bill fails to ensure these are factored in to the APR calculation.