Review of the consumer credit sector

7 April 2009

The OFT has announced plans to launch a review into the consumer credit sector as part of its wider Financial Services Strategy. See press release for the Financial Services Strategy and for Q & A for the consumer credit review.

Scope of the review

We propose that the focus of the review will be on unsecured consumer credit and that the review should consider:

• consumer behaviour and decision-making
• the degree of transparency in pricing
• how risk-based pricing operates
• whether the right incentives are in place for suppliers to provide the right products for consumers.

We are seeking to refine the scope of the review and would welcome comments and suggestions from interested parties over the next month. Specifically, we would be interested in comments, particularly those supported directly by evidence, on the following questions:

1. Our proposed focus is on unsecured consumer credit. In your view, are there other higher priority areas within the credit sector on which the OFT could focus its review? Also, are there particular forms of credit we should focus on?

2. We have identified four issues. Are these the key ones, or, in your view, are there other issues that would better define the scope of this review?

3. Credit reference agencies play a role in informing responsible lending decisions. In your view, are there any issues in this area that we should consider?

It should be noted that secured lending, such as first charge mortgages, are outside the scope of this review unless they are seen as substitutes for unsecured lending. Also, we will not be focussing on debt collection since there is considerable work already being done in this area.

Next steps and timing

We are inviting written comments on the scope of the planned study by 8 May 2009.

We will consider the views of respondents before determining the final scope of the review. The final scope, as well as information on the nature of the work will be presented as part of the formal launch of the review in summer 2009.

There will be an opportunity for interested parties to make substantive submissions on the issues raised in the review following the formal launch.

Submissions on the proposed scope of the review should be sent to:

Unsecured Consumer Credit Review
Fourth floor
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London EC4Y 8JX

They can also be emailed to: creditreview@oft.gsi.gov.uk

The OFT is unable as part of this review to address or advise consumers on individual matters or complaints. Consumers can seek advice from Consumer Direct either by telephone: 08454 04 05 06 or from the Consumer Direct website.

The Team Leader for the review is Peter Hill.

The project Director is Bob Chauhan.

The Senior Responsible Officers are Cavendish Elithorn and Ray Watson.

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