The Office of Fair Trading (OFT) said it was worried that some debtors were being misled about their ability to get their debts written off.

Thousands of claims have been launched in the past couple of years, against lenders, by borrowers trying to avoid repaying their debts.

The draft guidance focuses on the rules laid down by the Consumer Credit Act.

The OFT’s guidance draws on recent rulings by Judge Waksman at the High Court in Manchester.

He confirmed that it was acceptable for lenders to produce reconstituted copies of original loan agreements, for the purposes of providing the borrower with information about their loan.

The OFT said: “Some debtors are being misled into thinking that these sections [of the Consumer Credit Act] can be used to get their debts written off and that some creditors are not following legal obligations to provide information to customers.

“The lender is allowed to provide a reconstituted agreement, as long as that version is accurate and contains all the original information apart from the few exceptions that the law allows (which include the signature, signature box and date of signature).”

The authorities have been worried that some claims management companies have been drumming up business by exaggerating the chance of clients getting their debts cancelled.
 

One of these is that lenders have to produce a “true copy” of the loan agreement within 12 days of being asked.

If a legible true copy cannot be produced then the loan is temporarily unenforceable, by way of a county court judgement, until such time as a copy can be found.

Some claims management companies have argued that the debts are permanently unenforceable in these circumstances.