Personal debt law proposed

A PROPOSED law on personal loans would give more rights to borrowers and more obligations to lenders.

Among the measures to be discussed in June are:

 Banks should stress to borrowers that a loan “is a commitment and must be paid back.”

 Banks must make closer checks on people’s ability to repay before giving the loan.

 Seven-day retraction period to be extended to 14 days.

 If someone has an overdraft for more than a month they should get a letter reminding them of the penalties applied. The issue of how much interest can be charged on overdrafts – sometimes as much as 20% - will also be examined in parliament.

 Where shops’ loyalty cards double as credit cards they should function for credit only if the customer explicitly asks for it, otherwise they should act as debit cards instead.

“The aim is to make access to loans easier while eradicating excesses,” said Economy Minister Christine Lagarde

Consumer body UFC-Que Choisir? said the last measure does not go far enough – it thinks such cards should be banned and shops should not be able to try to sell credit to customers.