We have published guidance for firms on our interpretation of provisions in the Consumer Credit Act 1974 that are relevant to guarantor lending firms seeking to take payment from a guarantor in respect of a borrower who is in default. In particular, the guidance sets out how we consider firms are required to notify guarantors of their intention to take payment before they do so.
Why are we publishing guidance on this?
We consulted on draft guidance in October 2016 in GC16/7 (PDF), taking into account comments received on previous draft guidance in GC16/2 (PDF). We have taken the opportunity to make some minor clarifications to the draft guidance, in the light of responses received and discussions with stakeholders.
Who does this guidance affect?
This guidance is relevant to firms which offer guarantor loans, consumers and other interested stakeholders.
Whilst this guidance will not be binding on firms, we will take it into account in deciding whether a firm has followed the law and whether any supervisory or enforcement action is warranted.
We intend to keep the guarantor lending market under review, and may propose changes to our rules or guidance if we consider it appropriate to do so in the future.
In November 2016 we issued a Call for Input on high-cost credit, including guarantor lending. This remains open until 15 February 2017.