Bill: Draft Credit Standards Act

[xSyncx]

A
BILL
To

Establish credit term standards for lending services​

The people of the Commonwealth of Redmont, through their elected Representatives in the Congress and the force of law ordained to that Congress by the people through the constitution, do hereby enact the following provisions into law:

1 - Short Title and Enactment
(1) This Act may be cited as the ‘Credit Standards Act.'
(2) This Act shall be enacted immediately upon its signage.
(3) This Act has been authored by Representative xSyncx.
(4) This Act has been co-sponsored by Representative lcn.

2 - Reasons
(1) Key credit terms such as interest are sometimes used vaguely or unconventionally by institutions in Redmont.
(2) By establishing standards on these terms & required disclosures, all consumers will be able to fully understand the contracts they are offered.
(3) This will also protect consumers from being pushed into unfair contracts by requiring explicit outlining of important credit terms.
(4) Increased consumer protection may boost the loan market and encourage credit creation in the economy.

3 - Definitions
For the purpose of this bill, the following definitions apply:
(1) Credit - A contractual agreement in which a consumer receives funds from a creditor in exchange for deferred repayment. This debt may be subject to financial charges.
(2) Creditor - A person or entity who regularly extends credit.
(3) Consumer - A person or entity to whom credit is extended.
(4) Financial Charge - The cost of providing credit. This includes all immediate and ongoing fees associated with the product, such as interest, service fees & transaction fees.

4 - Credit Terms
When extending credit to consumers, creditors must offer the key credit terms below with the listed details. The terms must be provided in an accessible written format that can be kept in a meaningful way by the consumer.

1. Financial Charges: The cost of providing credit. This includes:
   • Interest:The interest applied to the principal or outstanding balance. The following characteristics must be outlined:
     • The nominal rate of interest per month as a percentage.
     • The form of interest: simple or compound. If compound, the compounding period must be specified. Interest cannot be applied as a force.
     • The variability of interest. If the rate is variable, the method & basis of rate change must be described.
   • All Others Service Fees
     • The dollar amount or percentage value of the charge.
     • The frequency of the charge.
     • The variability of the charge. If the rate is variable, the method & basis of change must be included.

5 - Excluded transactions

• Debt without interest and service fees

6 - Fines
(1) Violation of the Credit Standards Act
(i) Classification: Indictable Criminal Offence
Any omission of required information by creditors when extending credit, as detailed by the Credit Standards Act.
Minimum Sentencing: $5000 Fine
Maximum Sentencing: $10000 Fine