New guidance from the Office of Fair Trading (OFT) has been issued to ensure lenders do not mislead borrowers and ensure that customers can afford to repay loans.
The OFT said they expect all consumer credit businesses to fully comply with both the ‘word and spirit’ of the guidance.
The guidelines make it clear that lenders should:
- not use ‘misleading or oppressive behaviour’ when advertising, selling or enforcing a credit agreement
- make a ‘reasonable assessment’ of whether a borrower can afford to repay the loan
- explain the key features of a credit agreement so borrowers can make an ‘informed choice’
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