The Office of Fair Trading (OFT) has decided to step-in and launch a public consultation looking into the increasingly scrutinised irresponsible lending in UK consumer credit markets.

With the OFT facing an uphill struggle when considering a businesses ability to hold a consumer credit licence, consultation and identification of irresponsible lending has become an imperative act in the recent adaptations to the Consumer Credit Act.

The Consumer Credit Act 2006, which eventually came into working order a mere four months ago in April this year, put down a new framework and responsibility for the OFT in governing the consumer credit licensing regime.

The OFT’s consultation stage of the irresponsible lending project will involve a varied yet direct consultation with the likes of businesses, consumer groups and stakeholders, establishing transparent guidance on lending practices and behaviours which the OFT consider irresponsible.

The initiative is expected to consider all forms of consumer credit lending which the OFT licenses and all participants in the market, encompassing the likes of brokers and lenders.

The first phase will obviously require a full consultation to establish the range and nature of the project before reviewing the predominant issues considered such as marketing and advertising products, selling techniques, design, relevance of products to borrowers, completion sale and finally the management of consumers’ accounts.
OFT Director of Consumer Credit Ray Watson, stated: “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.