Warning To Lenders over Misleading Customers

Lenders are being warned by the Office of Fair Trading that they must ensure that they are not misleading consumers by saying that they debts can be enforced when in actual fact they cannot, according to a recent report. The OFT is equally concerned that some people in debt are being misled with regards to their ability to get rid of their debts.

The OFT has spoken out about its concerns amidst a series of test cases that are going to High Court to clarify the enforceability of consumer debts under the Consumer Credit Act. Depending on the outcome of the test cases thousand of cases that are pending in courts could be affected, similar to the recent bank charges cases after the banking industry won its appeal over being answerable to the OFT in relation to its terms and conditions.

The test cases are to be heard in Manchester, and the presiding just will be Judge Waksman. A draft guidance on part of the Consumer Credit Act has been presented to the judge by the Office of Fair Trading. The OFT has stated that its decision to produce guidance on the Consumer Credit Act was the result of concerns over consumers being misled over the enforceability of their debts. The watchdog said that it had particular concerns over the clarity of sections 77-79 of the Consumer Credit Act.

The OFT also said that there were concerns that some creditors appeared to not understand the extent of their obligations and responsibilities under certain parts of the Consumer Credit Act. There are currently twelve test cases that are being looked at in the High Court. The test cases are aimed at trying to clarify a number of areas where there appears to be confusion in the Consumer Credit Act.

With regards to creditors chasing payments from borrowers that have defaulted the current obligation is that the creditor must provide a copy of the signed loan agreement within twelve days of request by the borrower, and until this is done the debt cannot be enforced. However, whilst some creditors appears to be unaware of their obligations to some degree according to the OFT there are also consumers that are being misled by debt companies and Internet information with regards to the obligations of the creditors.

Louise Ward has been a consolidation loans expert since 2001 and works for Loans4.co.uk, a company specialising in consolidation loans and homeowner loan solutions. Visit http://www.loans4.co.uk/ today for expert advice and consolidation loans.