Consumer Credit Bill to 'outlaw' irresponsible lending welcomed

The amendment, due to be debated at the third reading of the bill in the House of Lords on 21 March, would add irresponsible lending to the list of practices the Office of Fair Trading (OFT) may consider as "deceitful or oppressive or otherwise unfair or improper" and gives the regulator powers to intervene where a credit business appears to them to involve irresponsible lending.

Teresa Perchard, director of policy at Citizens Advice, said: "We are delighted the government has decided to make it clear that in future lenders will be under a legal duty to act responsibly when selling credit. This will be backed by powers for the OFT to take action against those lenders who breach this duty. We have been calling for some time for a duty to lend fairly to be included in the much needed consumer credit reforms currently being considered by Parliament, so this is an important and very welcome addition to the bill.

She added: "Again and again Citizens Advice Bureaux report situations where poorer pensioners, people on very low incomes, disability benefits and people with mental health problems are offered credit cards and loans completely inappropriately, and end up with serious debt problems as a result.

"Lenders must be in no doubt that their right to trade in the consumer credit market depends on them being a responsible lender. This means considering whether the consumer really can afford to repay the loan or credit, as well as meeting their other commitments. This should be the primary objective of all lenders who want to trade fairly. It is in the interests of consumers and businesses to make sure the legal powers are there to challenge those lenders who just do not take this seriously."


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