Saturday, November 15th, 2008
New guidelines to help prevent irresponsible lending are being drawn up by the Office of Fair Trading (OFT).
The move follows changes introduced in the Consumer Credit Act 2006 which mean the OFT now has to consider the possibility of irresponsible lending before granting a consumer credit licence.
It is now in the process of consulting with business, consumer groups and other stakeholders to identify potential problems it may need to address. An OFT statement says: “The study will consider all forms of consumer credit lending which the OFT licences and all participants in the market, including lenders, brokers and other intermediaries.
“The issues the review could consider include the advertising and marketing of products, selling techniques, product design, use of credit scoring techniques, appropriateness of products to borrowers, sale of associated products and management of consumers’ accounts including handling of defaults and arrears.”
The main objective of the process is to produce clear and concise guidelines on practices which the OFT believes to be irresponsible and unacceptable. Failure to comply could result in a licence being revoked.
There are currently 120,000 consumer credit licence holders in the UK.
Ray Watson, OFT Director of Consumer Credit, said: “Credit is an important part of everyday life so it is vitally important that consumers are safeguarded from irresponsible lending and that businesses have clarity about what this constitutes.”
© Copyright 2008 Burt Brill and Cardens Solicitors