Consumers applying for
personal loans could soon be faced with a test to ensure they fully understand all relevant details.
There is growing concern that some borrowers are struggling to pay back excessive loans due to being unaware of all terms and conditions when signing up.
Consequently, ministers have announced that a wide-ranging review of the rules on consumer credit and personal finance is to be carried out.
Scheduled to begin later this year, the review will aim to make sure that the terms and conditions on
personal loans, store credit and
credit cards are better understood by all consumers.
Edward Davey, the consumer affairs minister, said the move would help to "improve the safeguards" on all current credit products.
Steven Jackson, of Beatmydebt.com, said: "It is a sorry state of affairs that people in Britain are not unable to understand simple calculations such as how much they will pay back if they take out a
personal loan.
"If taking tests before being allowed to have a loan means less people get into financial difficulty, I am all for it."
