OFT launches consultation on irresponsible lending
The Office of Fair Trading (OFT) has launched a public consultation on the scope of its project looking at irresponsible lending in UK consumer credit markets.
The consultation follows major changes to the Consumer Credit Act, which include the identification of irresponsible lending as a matter to which the OFT must have regard when it considers businesses’ fitness to hold a consumer credit licence.
The OFT’s irresponsible lending project, of which this consultation is the first stage, will involve wide consultation with business, consumer groups and other stakeholders. One of the key outcomes of the project is expected to be clear guidance on lending behaviours and practices which the OFT considers to be irresponsible.
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 initial phase of this project involves full consultation to define the range and nature of the project. 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.
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. The OFT looks forward to hearing from a wide range of businesses, consumers and representative bodies on these issues.”