Consumer Credit Act; OFT consultation on guidance for second charge lending

This consultation is aimed at producing effective guidance on the practices and procedures brokers and lenders should employ in relation to second charge lending to ensure that customers are not subject to "unfair or improper treatment". Ultimately the resulting guidance would need to be read in conjunction with the guidance on irresponsible lending that the OFT will publish in autumn 2009.

 The paper is high-level in terms of its content and it covers:

• General principles of customer care
• Pre-contract issues
• Contract issues
• Post-contract issues
• Possession actions, and;
• Regulatory compliance and enforcement.

Key issues for lenders will be the degree to which the guidance when published imposes requirements that are not consistent with the FSA conduct of business requirements and the degree to which additional requirements are imposed on lenders without clear and commensurate consumer benefit. The fact that the EU Commission has included second charge lending in its policy deliberations arising from its white paper on mortgage credit also creates the risk of regulatory overkill and/or inconsistency in the future.

The CML intends to respond to the consultation and welcomes feedback from members who are encouraged to respond also.