HSBC bad debts up 36 per cent

The surge in debt beat the overall 18 per cent profit rise at the bank as borrowers struggle with debt management.

“In the UK, the unsecured personal sector again contributed the major portion of the impairment charge in the period, largely as a result of rising bankruptcy filings and individual voluntary arrangements [IVAs],” commented the bank in its report.

“Excessive consumer indebtedness is increasingly an issue in the public domain.”

These findings come despite what HSBC says has been an increased effort to be a more responsible lender by sharing lender information with other banks.

Yet it said that bad debt charges had jumped to £361 million from £265 million while IVAs and bankruptcy cases had also risen by half.

HSBC said that it was important that individuals get debt support to help prevent this number from increasing further.

David Mond, of IVA arrangers ClearDebt, warned debtors to be careful when listening to advice from lenders: “Debt support, or debt management plans, usually require the debtor to pay no more than they would in an IVA, but do not offer the debt forgiveness, total interest freeze or stop on creditor action that an IVA provides.”

“Charges on debt management plans also often mean people see their debts decline slowly – we’ve even seen cases where people in debt management plans see their debts go up, rather than down.”

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