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The Office of Fair Trading (OFT) has published guidance on the irresponsible lending element of the test of fitness to hold a credit licence.
The Consumer Credit Act 1974 requires businesses that offer goods or services on credit and/or are involved in activities relating to credit or hire to be licensed by the OFT.
The new guidance issued will come into effect in February 2011, providing clarity for businesses and consumers about behaviour the OFT considers may constitute irresponsible lending practices under the Consumer Credit Act. It covers each stage of the lending process, from the pre-contract stage of advertising credit through to the handling of arrears and default on agreements.
The OFT makes clear that creditors should:
For further information about the irresponsible lending guidance visit the OFT website.
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The Consumer Credit Act 1974 requires businesses that offer goods or services on credit and/or are involved in activities relating to credit or hire to be licensed by the OFT.
The new guidance issued will come into effect in February 2011, providing clarity for businesses and consumers about behaviour the OFT considers may constitute irresponsible lending practices under the Consumer Credit Act. It covers each stage of the lending process, from the pre-contract stage of advertising credit through to the handling of arrears and default on agreements.
The OFT 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; and
- Treat borrowers fairly and with forbearance if they experience difficulties.
For further information about the irresponsible lending guidance visit the OFT website.
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