On 31^st March 2010 The Office of Fair Trading published guidance on irresponsible lending, the element of the test of fitness to hold a credit licence.

The guidance provides clarity for creditors and individuals about the types of behaviour that the OFT considers may represent irresponsible lending practices under the Consumer Credit Act. The guidance covers each stage of the lending process, from advertising and pre-contract information through to the handling of arrears and defaults on credit agreements.

Below is an extract from the OFT website.

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, and
• treat borrowers fairly and with forbearance if they experience difficulties.

Here is the link to view the complete guidance. Irresponsible lending - OFT guidance for creditors (pdf 860kb).

This is greatly welcomed by the debt advice industry that this guidance has been revised to give consumers greater protection.  Feel free to use this guidance as applicable in letters to your creditors when you are experiencing such difficulties and if the matter continues then you can raise a complaint with the Office of Fair Trading or contact us for further information.