New power strengthens consumer credit protection
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Issued 19 July 2012 - BIS
A new power to help clamp
down on rogue companies that provide goods or services on credit, lend
money, collect debts or help people with debt problems was announced
today by Consumer Affairs Minister Norman Lamb and the Financial
Secretary to the Treasury Mark Hoban.
The Government is to give the Office of Fair Trading (OFT) the power to
suspend a consumer credit licence with immediate effect where there is
an urgent need to protect the interest of consumers. Currently the OFT
has the power to suspend or revoke a consumer credit licence but
businesses can appeal this decision. Firms are able to continue trading
during the appeal period, which can last for up to two years. Consumers
can suffer significant harm during this time.
The power will be introduced by an amendment to the Financial Services
Bill at Committee stage in the House of Lords.
Consumer Affairs Minister, Norman Lamb, said:
“This will put a stop to those companies who exploit vulnerable
consumers whilst dragging matters through a slow legal process. It will
also give a boost to legitimate businesses, with the swift suspension
of unscrupulous traders.
“The new measure is part of a concerted approach to strengthen
protection around consumer credit, including issues such as payday
lending and debt management. We want to encourage, and give the tools
to, consumers to take sensible decisions.”
Financial Secretary to the Treasury, Mark Hoban, said:
“Today’s announcement sends a very strong signal that the OFT will
crackdown immediately on firms that exploit borrowers. The Government
has acted by strengthening the powers of the OFT and by moving the
regulation of consumer credit to the FCA which will have a much broader
range of powers to tackle lenders that break the rules.”
The new power will ensure that the OFT remains an effective regulator
across the interim period before the handling of credit regulation is
due to pass to the new Financial Conduct Authority in April 2014. There
has been widespread support for stronger powers for the OFT. The BIS
Select Committee called for a fast-track procedure for licence
suspension in its report on debt management in March 2012.
The OFT intends to consult in the autumn on how it will use this power,
publishing guidance in early 2013 before the power comes into effect.
1. The Government's economic policy objective is to
achieve 'strong, sustainable and balanced growth that is more evenly
shared across the country and between industries.' It set four
ambitions in the ‘Plan
for Growth’ (PDF 1.7MB), published at Budget
- To create the most competitive tax system in the G20
- To make the UK the best place in Europe to start, finance and grow a
- To encourage investment and exports as a route to a more balanced
- To create a more educated workforce that is the most flexible in
Work is underway across Government to achieve these ambitions,
including progress on more than 250 measures as part of the Growth
Review. Developing an Industrial Strategy gives new impetus to this
work by providing businesses, investors and the public with more
clarity about the long-term direction in which the Government wants the
economy to travel.
About the Author
© Crown Copyright. Material taken from the BIS Department for Business, Innovation and Skills. Reproduced under the terms and conditions of the Click-Use Licence.
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Article Published/Sorted/Amended on Scopulus 2012-07-19 15:16:49 in Business Articles