Consumer Watchdog to Investigate Advertised Interest Rates on Loans

Wed, 15 Apr 2009

The Office of Fair Trading could be set to crack down on lenders in a move which would force banks to reveal how many customers are actually offered the loan rates advertised. The probe is part of the initial stages of a wide ranging investigation by the consumer watchdog into the sale of unsecured personal loans . By law, two thirds of approved applicants for a personal loan must be offered the advertised interest rate, though it is alleged that banks have fallen well below this ratio in recent times.

Such allegations have risen following the economic downturn, as lenders safeguard their portfolios with only the safest loan deals. Indeed, it is said that only customers with flawless credit histories and large deposits are entitled to the rates, assuming they only want to borrow a relatively small sum.

Despite being responsible for overseeing advertised interest rates under the Consumer Credit Act, the Office of Fair Trading admits that it doesn’t regularly monitor the rates. As part of its investigation, the Office of Fair Trading will begin consulting with banks and consumer groups as it decides on precisely which areas are in need of investigation.
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