Banks not doing adequate checks

Thursday 10th April, 2008 

Lack of proper credit checks only serves to highlight that irresponsible lending is still rife. Recent research from uSwitch has raised concerns about the suitability of unsecured loans that consumers have taken out over the past year adding to their debt woes.

The comparison website claims that 70% of unsecured loans last year were issued without any proof of income. Income verification is necessary to establish whether or not the borrower can afford the loan. However, the availability of cheap money on the wholesale market last year meant that the banks could make a profit relatively easily and did not care about whether or not the borrower could afford the loan. The impact of the credit crunch has now changed lending criteria and the banks are being far more diligent about the people to whom they now lend money.

Debtwatchdog is calling for the banking industry to be more responsible in all circumstances and not only when the economic climate demands. For too long now the banks have been happy lending out money without carrying out proper checks to ensure that they will get all their money back and that the borrower can afford the repayments. In essence, they are fooling the borrower into thinking that being in debt is acceptable and sustainable. Unfortunately, the credit crunch means that the good times are over in terms of cheap loans and now it's pay back time - the banks want their money back. The casualties of this change in attitude will be the unfortunate borrowers who were conned into believing that they could afford loans and are now not being given any leeway when they get into financial trouble.

If you are in financial difficulty you should contact your bank in the first instance to discuss your problems and how to resolve them. Then try and gain control of your spending, use our free Statement of Affairs tool or visit our debt forum.