OFT guidance could help borrowers in 'unfair relationships'

The OFT (Office of Fair Trading) has updated its guidance on 'unfair relationships' between lenders and borrowers. The guidance was last revised in May 2008 - and the OFT has published guidance on 'irresponsible lending' since then.

The concept of 'unfair relationships' between people in debt and their lenders was introduced when the Consumer Credit Act 2006 amended the Consumer Credit Act 1974.

This is important because it permits borrowers to 'challenge a credit agreement in court' when 'the relationship between the creditor and the borrower […] is unfair to the borrower'.

The guidance does not define exactly what an 'unfair relationship' would be and states that 'it is for a court to determine whether there is an unfair relationship in an individual case'.

However, the guidance does indicate that the following could give rise to an 'unfair relationship' between a lender and a borrower:

•Advertising.
•Demanding sums of money the consumer has not agreed to pay.
•Omissions - not:
    •providing 'key information in a clear and timely manner (or at all)', or
    •disclosing 'material facts'.
•Using 'undue pressure or influence' to obtain payment.

If a borrower believes their relationship with their lender is 'unfair', they could also take the dispute to the Financial Ombudsman Service.