Lenders could face fines for "unfair practices" of debt consolidation

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Lenders and brokers could face enforcement action by the Office of Fair Trading if government authorities decide they have used unfair and unnecessary practices to sell debt consolidation loans.

An OFT fact-finding study was conducted recently with consumer groups and trade bodies to ascertain whether marketing of debt consolidation products and loans could be fairer, cheaper and transparent. However, details of the report published yesterday – as part of the Enterprise Act 2002 and reform of the Consumer Credit Act 1974 – suggests lenders are using unfair practices to tie consumers in, little independent advice offered to consumers on debt consolidation and consumers do not totally understand what they are signing up to when they take out a consolidation loan agreement so may n...

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