§ Mr. Janner
asked the Secretary of State for Trade and Industry whether he will seek to amend the Consumer 627W Credit Act so as to require banks to notify customers of any change in the rate of interest on an overdraft not previously agreed.
§ Mr. Howard
I have no plans to make such an amendment to the Consumer Credit Act in respect of overdrafts not previously agreed. Such overdrafts are an informal and flexible facility which offer considerable benefits to customers and to require written information to be provided would impose an undesirable burden on lenders and might operate to the detriment of customers. In the case of agreed overdrafts, however, an amendment will be made in due course to the Consumer Credit Act to implement the provisions of the Consumer Credit Directive which was adopted in December 1986. Where an overdraft is agreed in advance the directive requires certain information, including the interest rate, to be notified to the consumer at the time that the agreement is made and subsequently where there is a change in the terms of the agreement.