Consumers will be able to agree credit agreements online in a few weeks' time. Is this a good thing?
I have a confession to make. Every now and then (thankfully, not very frequently), I get a parcel from Amazon containing a book that I don't really want to read.
In fact, I'm looking at one of my mistakes right now. It's called The Naked Truth: A Working Woman's Manifesto on Business and What Really Matters. Nifty title, isn't it? I ordered it on the spur of the moment after reading a review of it in one of the online newspapers but now it's arrived I find the thought of reading it strangely unappealing!
The reason this is relevant is because after promising to bring the credit industry into the 21st century, the Government has finally announced that consumers will be able to agree credit agreements online from the end of the month. I'm wondering how this will affect people who, like me, occasionally do things on a whim.
As we all know, at the moment, although you can apply for a credit card or loan online, you still have to wait for the hard copy of the agreement to arrive in the post so you can sign and return it. This gives you a bit of time to sleep on your decision and to change your mind by the time the paperwork arrives.
The new rules, however, will make electronic signatures acceptable and speed up the application process so the instant decisions you make online will be extremely important.
Now, while I think this is a good thing for both the consumer and the industry, I wonder how it will work for people who sign up for credit on impulse. After all, according to recent research from the Office of Fair Trading, more than a third of 18-24 year olds have taken out credit while shopping when they hadn't intended to before setting out and one in five people have signed a credit agreement they later regretted. Even worse, the survey found that a third of people have arranged a credit deal without comparing it with other deals.
So, won't this new ability to sign up electronically for a credit card or loan result in people signing up for deals they haven't thought through properly? The safeguard that will be put in place is that consumers who enter into credit agreements online will have a 14-day 'cooling off' period when they can cancel the agreement. Of course, by then, they may not want to think about it - the arrival of a brand new credit card in the post may be just too tempting to even consider cancelling!
Further safeguards are that lenders will still have to post hard copy letters when any charges for missed payments are imposed or when issuing default notices, and agreements signed online will have to be capable of being stored for future reference in such a way that they can be reproduced without being altered in any way.
In the meantime, if anyone wants to read The Naked Truth: A Working Woman's Manifesto on Business and What Really Matters, I'm considering selling it through Amazon for a tenner. You'll find it in the Used section but I can assure you it really is 'as new'!
