New OFT guidance on consumer lending
by Gill Montia
Story link: New OFT guidance on consumer lending
The Office of Fair Trading (OFT) has published new guidance on consumer lending, which sets out the OFT’s view of what may constitute irresponsible lending practices under the Consumer Credit Act.
The guidance covers each stage of the lending process, from the pre-contract stage of advertising credit, through to the handling of arrears and defaults on agreements.
For example, it makes clear that creditors should:
Not use misleading or oppressive behaviour when advertising, selling, or seeking to enforce a credit agreement.
Make a reasonable assessment of whether a borrower can afford to make repayments in a sustainable manner.
Explain the key features of the credit agreement in order to empower the borrower to be able to make an informed choice.
Monitor the borrower’s repayment record during the course of the agreement, offering assistance where borrowers appear to be experiencing difficulty.
Treat borrowers fairly and with forbearance if they experience difficulties.
The OFT’s director of consumer credit, Ray Watson, says: “Our guidance makes clear to lenders the sort of practices that will be considered as evidence of irresponsible lending as we monitor businesses and their fitness to hold a credit licence.”