To provide clarity for creditors on mental capacity in the context of responsible lending and borrowing decisions, as to what the OFT requires of them. In addition, the guidance also aims to afford better protection to a particularly vulnerable sub-set of consumers from unsustainable borrowing, whilst also ensuring that they are not inappropriately denied credit.
Download the Summary of responses to the consultation on 'Mental Capacity - OFT guidance for creditors' (pdf 360kb)
During the consultation on the Irresponsible Lending guidance creditors sought clarity on how they might identify and deal with borrowers who are understood to have, or suspected of having, some form of mental capacity limitation that might constrain their ability to make an informed borrowing decision.
Until this project little attention had been focused on dealing with such issues at the lending decision stage; instead the emphasis has tended to be on dealing with post-contractual issues - that is once the borrower has got into debt.
The guidance was published on 28 September 2011.
The guidance sets out steps that consumer credit businesses can take with a view to:
The guidance focuses primarily on creditors adopting appropriate practices and procedures to assist borrowers who might not have the mental capacity to make informed decisions. These include:
Summary of responses to the consultation on 'Mental Capacity - OFT guidance for creditors' (pdf 360kb)
Press release OFT publishes mental capacity guidance (28 September 2011)
Mental capacity guidance for creditors: Quick Guide (pdf 71kb) - this is designed as an aide memoire for creditors when dealing with borrowers who it is understood or supected might have some form of mental capacity limitation that could impact on their ability to make an informed borrowing decision
Mental capacity - OFT guidance for creditors (pdf 547kb)
Mental capacity guidance consultation launched 6 December 2010
Mental capacity workshop 6 July 2010 handout - England and Wales (pdf 63kb)
Mental capacity workshop 13 -14 July 2010 handout - Scotland (pdf 56kb)
If you would like to contribute please contact Debbie Samosa (debbie.samosa@oft.gsi.gov.uk, 020 7211 8141) or Denise Ellis (denise.ellis@oft.gsi.gov.uk, 020 7211 8333).
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