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The Office of Fair Trading (OFT)says creditors should consider how they deal with borrowers whose mental capacity has been affected by illness or disability.
Following the consultation on irresponsible lending the OFT has identified a need to provide further clarity on the issue of mental capacity as it impacts on borrowing decisions. Mental capacity depends on people's ability to learn, remember and understand, and is different to mental illness. The OFT is consulting on how lenders should identify those who may struggle to make informed borrowing decisions. The consultation will close in March 2011.
The OFT said creditors needed to form a view on whether somebody was able, with support, to make informed borrowing decisions. This should ensure vulnerable consumers did not take on unsustainable or unsuitable credit commitments.
The draft guidance seeks to clarify:
For more information on the mental capacity guidance consultation visit the OFT website.
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Following the consultation on irresponsible lending the OFT has identified a need to provide further clarity on the issue of mental capacity as it impacts on borrowing decisions. Mental capacity depends on people's ability to learn, remember and understand, and is different to mental illness. The OFT is consulting on how lenders should identify those who may struggle to make informed borrowing decisions. The consultation will close in March 2011.
The OFT said creditors needed to form a view on whether somebody was able, with support, to make informed borrowing decisions. This should ensure vulnerable consumers did not take on unsustainable or unsuitable credit commitments.
The draft guidance seeks to clarify:
- What the OFT would expect from creditors, in terms of identifying borrowers who might lack the mental capacity to make informed borrowing decisions; and
- What the OFT would expect from creditors, in terms of the practices and procedures they employ in dealing appropriately with borrowers where it is known or reasonable grounds exist for doubting mental capacity.
For more information on the mental capacity guidance consultation visit the OFT website.
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