20 March 2006
The Citizen's Advice Bureau (CAB) has welcomed a government amendment to credit legislation that it says could outlaw irresponsible lending.
The body, which deals with over one million debt problems each year, said that the proposed changes to the Consumer Credit Bill could give the Office of Fair Trading(OFT) new powers to intervene where a credit business seems to be lending irresponsibly.
Citizens Advice director of policy Teresa Perchard said: "We are delighted the government has decided to make it clear that in future lenders will be under a legal duty to act responsibly when selling credit.
"We have been calling for some time for a duty to lend fairly to be included in the much needed consumer credit reforms currently being considered by parliament."
She added: "Lenders must be in no doubt that their right to trade in the consumer credit market depends on them being a responsible lender. This means considering whether the consumer really can afford to repay the loan or credit, as well as meeting their other commitments. It is in the interests of consumers and businesses to make sure the legal powers are there to challenge those lenders who just do not take this seriously."
The amendment is due for its third reading in the House of Lords on March 21st.
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