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Irresponsible lending report looms

The Office of Fair Trading (OFT) will next week report on its consultation on irresponsible lending and plans to consult further before producing its practice guidelines by July 2009.

Speaking at the Consumer Credit Trade Association (CCTA) conference, the OFT's director for consumer credit Ray Watson outlined the timeline for the project.

He said the next phase - a period of research and analysis - continues until February 2009 with draft guidance out in March 2009 and full guidance by July 2009.

"This is too important for there to be slippage," said Watson. "What we want is an outcome that provides clarity. In the past we have released guidance only fit for complete anoraks that never went out," he added, to laughs from delegates.

"But whatever we do, we have to make sure the outcomes fit with current regulation like the Consumer Credit Directive, Mortgage Conduct of Business, Treating Customers Fairly and the fitness test," he said.

The term 'irresponsible lending' has never actually been defined, said Watson and until it is, the industry will continue to work in the dark.

The report, drawn from 58 industry responses, which he refused to preview ahead of publication, closed to submissions on 24 October. It covers not just the decision to lend, but also advertising and marketing, sales techniques, product design and account management.

The project spans all types of lending from secured and unsecured lending to home credit, payday loans, credit cards and overdrafts and both lenders and intermediaries.

"We are not looking to be over prescriptive regulators or to over regulate," said Watson. He added that 90 per cent of licensees never put a foot wrong and "swift action" if a complaint arose was key to protecting both firms' reputations and consumers.

This article is written by Victoria Hartley and sourced from www.credittoday.co.uk