(Educators)CONSUMERS will be able to take disputes over credit cards and loans straight to a financial ombudsman, under a new scheme announced today.

The Department of Trade and Industry (DTI) said it would be introducing an Alternative Dispute Resolution (ADR) as part of the Financial Ombudsman Service, from April 2006, in a move to make it easier and cheaper for borrowers to resolve financial disagreements with lenders.

Currently only credit agreements taken out with banks or building societies come within the scope of the ombudsman service. The only option open to other borrowers is to take their case to court. But this is expensive and can also be complex and

time-consuming.

The future introduction of the scheme will give borrowers access to the ombudsman service, an independent complaints body, if they cannot resolve a problem with a lender. For example, they could go to the ombudsman if they believe they have not been informed about certain charges on a personal loan but the provider disagrees.

Gerry Sutcliffe, Consumer Minister at the DTI, said the announcement was part of a 'massive shake up' of the consumer credit industry.

'We want to ensure the market becomes more transparent, fairer and trusted. Resolving disagreements fairly and quickly is a vital part of this process. Taking disputes to court can often be off putting and intimidating for consumers as well as expensive, time-consuming and stressful for business.

'This new system provides a much-needed and approachable alternative to court with a professional and expert body that already has specialist knowledge and a track record of handling consumer complaints about financial services,' he added.