Whilst that's true, there are some potentially sketchy practices which it theoretically permits (in reality if the lender is regulated it's unlikely they'd risk

Whilst that's true, there are some potentially sketchy practices which it theoretically permits (in reality if the lender is regulated it's unlikely they'd risk them these days but in the small business lending sector you can find examples by googling "RBS GRG West Register"). This classic example is lenders forcing an auction into which they know the only likely bidder is a related company of the lender.