Providers warned against irresponsible lending - Money - News - Moneyfacts

News

Providers warned against irresponsible lending

Providers warned against irresponsible lending

Category: Money

Updated: 31/03/2010
First Published: 31/03/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Providers have been warned they face losing their credit licence if they mislead customers and are now obliged to assess whether borrowers can afford loans.

The judgement has come from the Office for Fair Trading (OFT), which has published guidelines on irresponsible lending, covering all areas from advertising to handling of arrears.

The regulator has been consulting on the guidance for almost two years, and now expects creditors to:

  • Not use misleading or oppressive behaviour when advertising, selling, or enforcing 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 a credit agreement, allowing borrowers to make an informed choice
  • Monitor borrowers' repayments records during they agreement, offering assistance if troubles arise, and
  • Treat borrowers fairly and with forbearance if the experience difficulties.

"This guidance helps all lenders avoid the risk of engaging in behaviour or practices which may lead to action by the OFT," said Ray Watson, director of consumer credit at the OFT.

The Citizens Advice Bureau's debt policy officer, Peter Tutton, said the guidance sent a clear signal that lenders must get their houses in order and was a big step towards ensuring consumers are treated fairly and not taking out credit that will lead them deep into debt.


Find the best mortgage for you - Compare best selling mortgages

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

77% of Christmas gifts unwanted

Research from Policy Expert has revealed that while Brits spend an average of £424 on presents for friends and family, more than three quarters (77%) of these gifts may be unwanted.

New Year tips to improve children’s money skills

How many have better budgeting as their New Year’s resolution? As with many things, these skills are best learned when young, so Lemonade Money has come up with some tips to help parents make their children more financially savvy.

Money worries lead to Christmas on credit

Money worries are putting Christmas at risk for up to five million Brits, with 10% saying they regularly worry about money in the lead up to Christmas, and the same proportion feeling stressed about how much they are spending.
 
Close