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Finance
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New rights for low-income borrowers
New rights for 'low income borrowers'
People on low salaries are set to benefit from a new law which will regulate how lenders sell loans to borrowers, states Mondaq.
Under the new rules, borrowers will be able to question any unfair aspects of the relationship which arise between themselves and the money lender, reports the BBC.
Critics hope that the new regulations will dampen the prospect of banks taking advantage of those who have most difficulty paying money back.
Under the Consumer Credit Act 2006, the customer will also get more opportunities in which to complain to independent services such as the Financial Ombudsman Service.
It means companies will have to rethink their current policies to make sure they comply with the new set of rules.
Ingrid Gubbay, a campaigns lawyer from Which?, said the rule could discourage lenders from offering high-risk consumers a loan.
She told the BBC: "If the borrower has problems with repaying and that's accompanied by behaviour from the lender to recover the money that contravenes the unfair relationships test."
Banks will now be forced to scrutinise the customer in more detail before offering them a loan and to make fairer judgements regarding repayment possibilities.
All credit deals taken up from licensed credit providers will now be liable for surveillance under the new ruling.
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