OFT To Look Into Loan And Other Contracts
Over recent years there have been several problems for consumers which have been caused by them not understanding the contact they have signed, leaving them in a financially difficult situation.
Whether it is for a personal loan, or a mobile phone or credit card, for example, many contracts can be long, complicated and full of technical jargon, which invariably leads to consumers not even bothering to read them, or not fully understanding them even if they do.
As a result of this confusion, the Office of Fair Trading (OFT) is planning to conduct an investigation into contracts, particularly in the area of financial contracts such as personal loans, home owner loans and credit card agreements, in order to ascertain how well consumers understand what they are taking out, along with the long term financial implications.
The study will also look into how the contract is presented, whether this is on line, by post, over the telephone or in a face to face interview.
The OFT aims to help those companies which are trying to help customers by making their contracts clearer and easier to understand, whilst closely examining the practices of those firms which deliberately make their contracts complicated and unclear, which could lead to consumers being disadvantaged by a lack of understanding. An example of this might be someone wanting to make overpayments on a loan, or pay the loan off early, without realising that there may be heavy repayment penalties.
Heather Clayton of the OFT said “Today consumers are offered a range of complex contractual arrangements, particularly for goods and services offered online. We often see situations in many different markets where people lose out as a result of not understanding contracts.
“We want to understand the cause of these problems and look for remedies that will not only protect consumers, but also help those businesses that are trying to provide clarity to their customers.”
