Standard Life claims that reviewing a customer’s full financial situation is “paramount”, particularly when issuing large loans such as mortgages, or else it could lead to a debt problem.
Anne Gunther, chief executive of the bank, said: “As a responsible lender we believe it makes far more sense to look at a mortgage applicant’s full financial circumstances, including any money they owe, financial commitments and earnings and to lend based on what they can afford to pay back each month.
“We would like to see all providers adopting this method of lending as ‘best practice’ and their primary consideration in the decision.”
The bank states that it only started more responsible lending in 1999 and the comments come two days after Abbey, the second largest mortgage lender in the UK, announced that it was offering customers the opportunity to borrow five times their annual salary.
This has sparked fears that people may get into problems with debt management and lead to a major financial crisis.