Designed to weed out rogue lenders, the governmental crackdown by way of these Consumer Credit Act 2006 changes will place a particular focus on high risk sectors such as debt collection, giving the OFT greater powers to penalise lenders.
As a result, the OFT can now choose to restrict or completely remove the Consumer Credit Licenses of rogue or incompetent firms, or impose fines of up to £50,000.
Consumers will also find it easier to complain when receiving bad or unfair treatment, gaining the ability to challenge unfair credit agreements in court.
In the biggest shake-up of the consumer credit market for more than 30 years, the government has also removed the £25,000 threshold above which consumer borrowing is not currently regulated.
John Hutton, Secretary of State for Business and Enterprise said: "Enforcers now have the powers they need to crack down on the small minority of traders who treat consumers unfairly. Pressure sales techniques, unfair terms and conditions, extortionate interest rates or aggressive debt collection practices will not be tolerated.
"By cracking down on the rogues and driving up standards we will create a level playing field that will enable honest businesses to thrive."
Teresa Perchard, director of policy at Citizens Advice Bureau, praised the changes saying: "New powers to fine companies for bad behaviour and to set clear standards for licence holders should give the OFT the abilities it needs to round up the cowboys and to clean up the market."
The final phase of the CCA will be rolled out in October 2008.
