The Office of Fair Trading (OFT) has published guidance which contains information about behaviour it considers may constitute irresponsible lending under the Consumer Credit Act. The guidance covers each stage of the lending process, from the pre-contract stage of advertising credit through to the handling of arrears and default on agreements.

The OFT expects creditors to have regard to the guidance so that they can avoid engaging in irresponsible lending practices. For example, it makes clear that creditors should:

  • Not use misleading or oppressive behaviour when advertising, selling, or seeking to enforce a credit agreement.
  • Make a reasonable assessment of whether a borrower can afford to make repayments in a sustainable manner.
  • Explain the key features of the credit agreement in order to empower the borrower to be able to make an informed choice.
  • Monitor the borrower's repayment record during the course of the agreement, offering assistance where borrowers appear to be experiencing difficulty.
  • Treat borrowers fairly and with forbearance if they experience difficulties.

View Irresponsible lending - OFT guidance for creditors, 31 March 2010