Risk of consumer debt ‘considerable’
Article Category: Debt Management Help and Advice
There is a “considerable” risk of consumers taking on more expensive forms of debt following an Office of Fair Trading (OFT) consultation, it has been warned.
Proposals outlined in the OFT’s approach to consumer credit licences could see some lenders withdraw from the market, according to the Association of Finance Brokers (AFB).
As a result, the number of Britons forced to turn to loan sharks could increase, the industry body asserts.
Director of the AFB Robert Sinclair explains: “Current requirements could create such an un-level regulatory playing field that some borrowers could be obliged to turn to alternative funding.”
This includes mortgages with early repayment charges and “door-step lenders advancing very expensive unsecured credit”, he proposes.
Meanwhile, the AFB states that consumers who make the minimum repayment on their borrowing might not be in financial difficulty.
Such a technique could be an indication of effective credit card management, according to the organisation.
But draft guidelines from the OFT indicate that no further lending should be extended to consumers who exhibit such behaviour.
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