Wednesday 5th of August 2009
New guidance from the OFT may make it easier for people who are already struggling with debt management to avoid falling into further financial hardship.
The Office of Fair Trading (OFT) has launched a consultation setting out guidelines for banks in developing a responsible lending policy.
Among the recommendations set out in the consultation is the requirement that banks avoid offering lending to people who are already experiencing serious debt management difficulties.
Furthermore, lenders must demonstrate that they have examined a potential borrower’s ability to take on and pay off new debt during the application stage.
"It is important that consumers are protected from lenders acting irresponsibly, especially in tough economic times. We believe that clearly setting out minimum standards expected from the industry will help to achieve this," said Ray Watson, the OFT’s director of consumer credit.
Last month, the OFT also outlined its short and medium-term financial services plan to ensure that consumers continue to get a fair deal as the sector changes shape in the wake of the economic crisis.
