The Office of Fair Trading (OFT) warned the lenders not to mislead the borrowers and asked them to ensure that borrowers are capable of repaying the debt they were taking. The regulator released the new guidance to counteract irresponsible lending.

The OFT had been under the process of finalizing similar guidelines for nearly two years now. As per the final diktat lenders are prohibited from using any statement that could be misleading or oppressive when it comes to advertising, selling, or enforcing a credit agreement.

OFT also clarified, it's the lenders, who have to do a reasonable assessment of the borrowers' ability to pay back. The lenders were also asked to make sure that they clarify all critical features of a credit agreement to the borrower before he goes for the final decision.

The Office of Fair Trading also said that it can ultimately suspend a lender's consumer credit license, if the lender breaches the conditions set by the regulator.

"We expect all consumer credit businesses to fully comply with both the word and spirit of this guidance," the OFT said.