The Office of Fair Trading has published for consultation guidance on how provisions of the Consumer Credit Act 2006 may be used to protect consumers
The Act will allow borrowers to challenge credit agreements in court on the grounds that the relationship between the parties is unfair.
The new ‘unfair relationships’ test will replace the current concept of extortionate credit bargains.
In addition, the OFT and other enforcers will be able to take enforcement action under Part 8 of the Enterprise Act where unfair relationships harm the collective interests of consumers.
The draft guidance provides advice to businesses, their advisers, and consumer organisations, as to how the OFT proposes to use Part 8 powers in relation to unfair relationships.
In acting under Part 8, the OFT’s aim will be to improve trader behaviour and protect consumers generally from abuses in the credit market, but it cannot seek redress for individual consumers.
John Fingleton, chief executive of the OFT, says: The new unfair relationships provision provides important new protection for borrowers.
The draft guidance sets out how we expect to exercise our enforcement powers in relation to it, so that we may assist business in complying with the new law.
We look forward to receiving comments from anyone with an interest in the new provisions.