Consumer rights strengthened for borrowers without mental capacity

A new set of guidelines have been issued to lenders to clarify the consumer rights of those who may not have the mental capacity to make borrowing decisions, which could help these individuals seek legal advice.

The Office of Fair Trading (OFT) has issued rules in three areas to ensure creditors identify those borrowers who might have mental capacity limitations, assist them to understand the agreements they are making and to reduce the risk that they will be granted products that are either unaffordable or unsuitable.

In terms of consumer rights, these individuals can expect to be given clear information and explanations about the risks, be given adequate time to consider this and to be stringently assessed in terms of their ability to meet repayments.

David Fisher, director of the OFT's consumer credit group, has highlighted the fact that this is a sensitive area where both the borrowers and lenders' needs must be balanced.

He said:"We aim to provide clarity for creditors as to what the OFT expects of them and to afford better protection to a particularly vulnerable group of people, whilst  ensuring that they are not inappropriately denied credit."

In other news, the Financial Services Consumer Panel has called for regulatory reform to improve consumer rights more generally and to grant access to information on businesses in the financial services sector.

Published by Phil Hammond