NEWS...
OFT Focuses on 'Irresponsible Lending Project'
New guidelines expected later this year...
The Office of Fair Trading has widened its scope further in its 'irresponsible lending' consultation to now include credit scoring, putting UK lending practice under even greater scrutiny.
The OFT project will include advertising, marketing, selling techniques, product design, defaults and arrears handling, whilst the body will also put 'borrower behaviour' and 'repayment of credit' under the microscope.
Their findings - and the subsequent decisions made - could have a significant impact on the world of lending and collection.
However, the OFT has said it will work with stakeholders to take this project to the next stage, with the organisation planning to provide a draft for consultation in the next few months, with a view to publishing the final guidance document this summer.
The initial consultation, which garnered 58 respondents - including Cattles, the Consumer Finance Association, BP Law and the Civil Court Users Association - outlined their feeling that sufficient regulation of lending was already in place and further guidance was not necessary.
The OFT disagreed, stating no area would be exempt from further regulation, including the marketing of loans to vulnerable groups.
The OFT intends its guidelines to define the meaning of the term 'irresponsible lending' and claims it is ready to sanction lenders that breach what it considers 'fair' lending practices.
Many in the industry believe that it is positive that the OFT intends to engage with stakeholders before issuing the draft guidance for consultation. Jan Smith, industry relations director at Callcredit, explained: "We know from our clients just how many responsible lenders are already taking new steps to assess borrowers' ability to repay before extending further credit."
Original article courtesy of Credit Today. For further information visit www.credittoday.co.uk
