The new Consumer Credit Directive has been welcomed by one organisation, which stated that professionals should already be implementing its standards.

A spokesman for the Personal Finance Society said clients need to make sure they understand any sort of financial contract they enter into.

"It might help weed out some of the cowboys. Really I think the message to the general public is always to use a properly qualified professional," he suggested.

Credit checks need to be carried out properly, the spokesperson revealed, which again should already be common practice for bona fide professionals.

Raising consumer understanding of financial products is paramount, he added.

The Department for Business published on July 24th proposals for draft regulations to take forward the implementation of the Consumer Credit Directive.

Lenders will be required to check consumers’ creditworthiness before they borrow and fully explain financial products, while giving transparent, standardised information.

Consumers will also be entitled to a 14-day period within which to withdraw from credit agreements, to enable them to determine whether the conditions meet their requirements.