Banks and Consumers

BANKS AND CONSUMERS
transparency for borrowers, customers are
given pre-contractual information about
the loan they wish to take out before an
actual agreement is signed. In practice, this
means the bank provides the customer with
information about the type of credit, the
associated costs and other important features
of the loan. This information is presented in
tabular form, as required by law.
The tables used are standardised
throughout Europe but vary depending on
whether an instalment loan, an overdraft
facility or a mortgage credit is involved. This
allows the special features of all types of
credit to be accommodated.
Banks now also have to fulfil more
extensive information requirements when
the agreement itself is concluded, thus
providing customers with a further basis for
making their decisions. The loan agreement
has to contain additional information on
matters such as the responsible supervisory
authority, the relevant Ombudsman Scheme
or details of any loan broker involved. These
additional requirements also make contracts
lengthier than before, however.
If customers wish to know more about
certain aspects of a loan agreement, they
should contact their adviser direct. Bank
advisers will in future be expressly required
by law to provide borrowers with adequate
explanations before a loan contract is
signed so that they are in a better position
to judge whether the agreement really
matches their objectives and financial
circumstances.
If a bank advertises a specific rate of
interest, the advertisement must indicate
– possibly by providing an illustrative
example – the interest rate which will apply to
the majority of loan agreements it concludes.
This is to avoid misunderstandings which
might arise if, for instance, the interest rate
mentioned in an advertisement was offered
only to consumers with a certain credit
standing.
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