FISA Calls For Project On Irresponsible Loan Lending
There has been a lot of talk about irresponsible lending within the mortgage and personal loan industries over the past few months, as an ever increasing number of borrowers are finding themselves in financial difficulties as the credit crunch tightens and they struggle to meet their monthly repayment commitments.
Many individuals are blaming the various lenders for the current problems, as they claim it has been too easy to obtain credit in the past and lenders have not made suitable checks on affordability for customers before offering a new loan.
The Finance Industry Standards Association (FISA), which is the self regulatory and compliance organisation within the secured loan industry, has called on the Office of Fair Trading (OFT) to carry out a specifically focused project into the area of irresponsible lending, in order to deliver some guidance and principles to both lenders and brokers working within the loan industry.
FISA has also suggested that the guidance should be tailored to suit different types of loan, as lending criteria can be very different between for example, unsecured loans and secured loans.
FISA is encouraging the OFT to focus on two specific areas.
Firstly, that all loan providers have a responsible lending policy within the company, which is used as a base for lending decisions along with a suitable affordability model and secondly, that brokers and intermediaries who offer secured loan services to their clients, should be clear about their own responsibilities when it comes to giving suitable advice.
John Parker of FISA said “FISA recognises the importance of this OFT project and has been involved from a very early stage. In the current economic and political climate the need to avoid irresponsible lending is of critical importance. Producing guidance to help define the responsibilities of both lenders and brokers will be of major importance and we look forward to continuing our work with the OFT to help shape the project.”
