The Office of Fair Trading has launched a investigation into the unsecured financial sector to make sure it is working as it should with borrowers during the recession.

It says its priority is to promote fairness and responsibility between the credit industry and consumers, and advocate choice and competition to ensure that public decisions made to deal with the current crisis do not harm competition in the long term to the detriment of consumers.

Currently, the secured lending market is regulated by the OFT, and until the Financial Services Authority decides to bring secured lending into its jurisdiction, then any decisions it makes will affect secured loans.

John Fingleton, chief executive of the OFT says: "Much of our work is already aligned with the needs of consumers, business and the economy in the current crisis but this strategy will sharpen our financial services focus over the coming year.

"With our focus on credit, we are addressing the area in which there is a real risk of short-term consumer harm while also ensuring that the sector that emerges from the current crisis is competitive and behaves fairly and responsibly towards consumers.

"Looking further forward, the financial services sector that emerges should be characterised both by effective prudential regulation and open markets. Choice and competition involving existing players and new entrants are vital to delivering growth, prosperity and a good deal for consumers. There is a risk that this could be overlooked in the re-design of financial regulations, with high costs for consumers and the economy."

This is great that the Government plans to make sure that the consumer is not harmed. But the consumer can do a lot themselves – making sure they only deal with secured loans through a reputable, authorised professional, and making sure they can afford what they commit to and making sure that every decision they make is for the long-term.

SOURCE: OFT, 07/04/09

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