OFT to consult on irresponsible lending

The Office of Fair Trading (OFT) has announced its plans for a consultation on irresponsible lending, following changes to the Consumer Credit Act.

The Office of Fair Trading (OFT) has announced its plans for a consultation on irresponsible lending, following changes to the Consumer Credit Act.

Adaptations to the Act are intended to protect credit card customers, as well as mortgage and loan users, from irresponsible lending which has caused problems and misery for both consumers and banks in recent years.

Financial institutions will now have to show they are capable of responsible lending when applying for their consumer credit license, and so the consultations from the OFT are aimed at educating businesses over what is considered irresponsible lending.

Such consultations, coupled with amendments to the Act, will ensure credit card customers are no longer offered cash they cannot repay, and that those already facing debt problems will not be offered more expensive loans to add to their problems.

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," he added.