The Office of Fair Trading is conducting a study over the next six months to establish how much cons...
The Office of Fair Trading is conducting a study over the next six months to establish how much consumer know about the debt market and what they are committing themselves to when consolidating loans.
Debt consolidation is thought to make up around 60% of all second mortgages and is worth around £8.7bn in secured loans.
Yet the OFT is concerned that many consumers are not aware consolidating credit cards and other unsecured loans is effectively taking out a second mortgage.
The OFT says it also wants to ensure lenders are being responsible in their dealings with consumers, as problems tend to arise when borrowers are unaware that the loan is secured on property, what the overall cost of the loan is, what the consequences might be of defaulting on a payment and that the length of time a debt might take to pay off can increase.
To make a full assessment of the loan sector, the OFT will look at:
Assessment of this size carried out under section 5 of the Enterprise Act 2002, which finally comes into force on Friday 20th June, so the OFT can report back by January 2004.
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