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Change in credit laws affects dealerships

Dealers are being warned about a change in consumer credit laws which are in effect now.

The new regime under the Consumer Credit Act 2006 requires all companies that hold a consumer credit licence to have “appropriate and effective procedures” for dealing with any consumer complaints.

Dealers already meeting Financial Services Authority (FSA) regulations regarding insurance sales will be generally compliant as the rules mirror closely the FSA requirements.

The procedures must be written down and provided to employees. They must agree to acknowledge complaints within five days and endeavour to settle or reject the matter within four weeks.

They must also inform customers of their ultimate right to refer an unresolved dispute to the Financial Ombudsman Service (FOS). The FOS can order compensation awards of up to £100,000, and strip a business of its consumer credit licence.

Customers are to be made aware of their rights at the point of sale, and written copies of a company’s procedure must be available at the customer’s request. There is no specified requirement to keep records of transactions or advice; however, consultancy Creditcomplaints.co.uk says this is advisable in case evidence is required.

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