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The Government introduced reforms in statutory instruments in 2005 and in the Consumer Credit Act 2006 to strengthen the regulation of consumer credit. These ensure that consumers are given clear and transparent information to enable them to shop around with confidence and that the OFT can take targeted and effective enforcement action against rogue lenders. The Act also replaced previous provisions which gave consumers a right to challenge extortionate credit bargains with a new wide-ranging right for consumers to challenge before the courts any aspect of their relationship with a lender which is unfair. This could include, but is not limited to, the level of interest charged.
The Government recently held a summit with the credit card industry on risk based re-pricing - the practice that was leading to some consumers facing significant interest rate increases at short notice. As a result of this, the credit card industry agreed a statement of principles for risk based re-pricing. This ensures that consumers are fairly treated when a card lender seeks to increase their individual interest rate on the basis that their risk profile has deteriorated. These principles come into force on 1 January 2009.