Time to stop ‘binge-lending’

According to the consumer finance website, 70 per cent of banks approve loans without income checks, while 1.9 million loans are given without affordability ratings, meaning that credit could be allowed for those who risk debt.

“With one person in the UK falling victim to insolvency every minute of the working day you might think that the lenders would have learnt their lesson after record write-offs on bad debts, but the profits to be made are obviously too good to resist,” said Nick White, director of financial services at uSwitch.com.

His comments come as official figures show a massive rise in the amount of bankrupts and Individual Voluntary Arrangements (IVAs) in England.

Mr White believes that a lot of this is due to irresponsible lending and has called on the industry to clean its act up or face tough restrictions.

“If this situation doesn’t improve in the near future, serious questions need to be raised over the effectiveness and suitability of self-regulation and the government may need to intervene to impose more effective guidelines on the existing income and affordability procedures exercised by the banks on the sale of unsecured lending products,” he warned.