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Possible changes to credit practices
The Office of Fair Trading (OFT) has announced possible changes to credit practices that could help vulnerable customers.
It proposes introducing legislation addressing the issues arising in the sub-prime unsecured credit brokerage market and even suggests banning upfront fees.
According to the OFT, 270,000 people it the UK paid an upfront fee to an unsecured credit broker in the past 12 months, in return for being offered an unsecured loan.
However, complaints about these fees have more than doubled between 2008 and 2010.
British consumers who have been declined a loan can seek an unsecured one, but these can lead to problems and they could even lead them to be refused credit in the future.
"Our evidence suggests some businesses are deliberately taking people's money upfront with no realistic expectation of finding them the type of loan they need," explained John Fingleton, chief executive of the OFT.
"We will continue to take robust enforcement action against businesses using unfair or improper business practices and we are providing new guidance making very clear the kind of behaviour we expect from the industry."
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It proposes introducing legislation addressing the issues arising in the sub-prime unsecured credit brokerage market and even suggests banning upfront fees.
According to the OFT, 270,000 people it the UK paid an upfront fee to an unsecured credit broker in the past 12 months, in return for being offered an unsecured loan.
However, complaints about these fees have more than doubled between 2008 and 2010.
British consumers who have been declined a loan can seek an unsecured one, but these can lead to problems and they could even lead them to be refused credit in the future.
"Our evidence suggests some businesses are deliberately taking people's money upfront with no realistic expectation of finding them the type of loan they need," explained John Fingleton, chief executive of the OFT.
"We will continue to take robust enforcement action against businesses using unfair or improper business practices and we are providing new guidance making very clear the kind of behaviour we expect from the industry."
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Published: 01/06/2011
The information in this article was correct at the time of publication and contains time sensitive data and links, it may not be accurate at the time of reading.