EuroDebt gives OFT plans thumbs-up

03/08/2009

A new consultation from the Office of Fair Trading (OFT) aimed at promoting more responsible lending among UK banks has been warmly welcomed by EuroDebt.

The proposals, revealed last week, include plans for much clearer marking of "key facts" about credit products, so that borrowers are clearer about what they are signing up for when they take out a loan or card.

If adopted, lenders could also be obliged only to advance credit to customers who they feel will be able to give the money back in a "sustainable" way.

This in turn would help to put an end to borrowers taking on far too much debt - and finding themselves in dire financial straits as a consequence.

Kevin Still, director of EuroDebt, commented: "One of our on-going concerns has been that there has been growing evidence that many clients starting a Debt Management Plan or an IVA have been granted sizeable amounts of credit even after it was apparent from their credit file that they were already over-committed."

He added: "It is crucial that lenders employ the best possible practices to ensure that they do not extend credit to those unable to repay it. We are therefore pleased that the OFT is looking at the issue of irresponsible lending and will be putting forward our views for the consultation."

EuroDebt's own analysis shows that the main reason why over 21 per cent of clients came for debt management help were that they were locked in a "debt spiral".

Another 15 per cent said that they were suffering from "poor financial management".

Tags; Debt Management and Banking, Young Family Finances, Credit Card Lifestyle, Recent Graduate Debt,

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