Home News Irresponsible lending contributing to spiralling consumer debt, says Citizens Advice

Irresponsible lending contributing to spiralling consumer debt, says Citizens Advice

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Today the Bank of England consumer credit statistics show that consumer borrowing has risen by 9.8 % in the year to August 2017, and now stands at £203 billion.

In August, research from Citizens Advice revealed that 1 in 5 people struggling with credit card debts had their credit limit raised without them requesting it – showing that lenders were increasing people’s access to debt without the proper affordability checks.

As the Bank of England urges banks to protect themselves from people defaulting on credit agreements, Citizens Advice is asking the Financial Conduct Authority (FCA) to make sure people aren’t being offered unaffordable debt.

Gillian Guy, Chief Executive of Citizens Advice said:

“It’s clear that irresponsible lending is contributing to the rising levels of consumer debt.

“Our evidence shows that people who are unable to pay off their credit card debts are having their credit limit raised without them requesting it – which risks pushing them further into debt.

“It’s essential that lenders carry out thorough affordability checks before giving people more credit so that borrowers aren’t led deeper and deeper into debt.

“With prices rising faster than wages, household finances are increasingly stretched meaning debts that seem affordable now may be unmanageable in future. The FCA should step in to protect borrowers by banning credit card companies from automatically raising credit card limits and making lenders support customers who are starting to struggle.”

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