OFT imposes requirements on second charge lender

An OFT investigation found Swift was giving secured loans to customers with poor credit histories or limited access to credit without:

- checking whether they could afford the loan

- verifying their income

- taking account of their other financial commitments and personal circumstances

-  fully checking the information provided in the application.

Secured lending is considered to be high risk by the OFT because borrowers are at risk of losing their home if they default on a loan.

The OFT also uncovered evidence in some cases that Swift failed to fully explain the charges that could be incurred if customers fell into arrears and failed to exhaust alternative options before taking borrowers to court.

As a result, the OFT has imposed a set of requirements on Swift, which ensures it must:

- carry out proper assessments of a borrower's ability to repay the loan without undue hardship

- only take steps to repossess a borrower's home as a last resort

- be transparent about their charges and when they apply.

David Fisher, OFT Director of Consumer Credit, said:

"Credit businesses must lend responsibly - failure to do so can have a very serious impact on borrowers. We require Swift to significantly improve the way it carries out its business. If they fail to comply with these requirements, they will face further enforcement action."