Section 52 of the Consumer Credit Act 1995 grants consumers a statutory right to discharge their obligations under a credit agreement before the full term of the agreement and also to a reduction in the total cost of credit where they avail of that right. Section 52 provided that the Central Bank could approve formulae for calculating such reductions in the case of lenders who are credit institutions and that the Director of Consumer Affairs could approve formulae in any other case. These functions have now been transferred to the new Irish Financial Services Regulatory Authority under the Central Bank and Financial Services Authority of Ireland Act 2003.
I am advised that IFSRA, in formulating its strategy in terms of its statutory responsibilities under the 2003 Act, has identified the development of early repayment formulae as a priority and will be addressing this issue in the near future.
Both the 1995 and 2003 Acts provided for the option of prescribing formulae by ministerial regulation. This approach would merely have the effect of replacing an approved formula with a prescribed one, and might be more difficult to extend to new or unusual forms of credit as they emerge. A prescribed formula might also inhibit competition by preventing the offer of more favourable terms by creditors. I will await the outcome of the work within IFSRA before considering this option.