The Bank of England’s latest money and credit statistics show consumer borrowing increasing by 10.5% in the year to February to £196 billion. As the Bank and the Financial Conduct Authority launch reviews into lending practices, Citizens Advice says more must be done to make sure lenders across all consumer credit markets behave responsibly towards their customers.
Chief Executive of Citizens Advice Gillian Guy said: “While households are struggling to meet everyday costs like rent and bills, the amount that people are borrowing on credit cards is also continuing to rise. In the last year Citizens Advice has helped 200,000 people with household debts and 150,000 people with consumer credit debts, including personal loans and overdrafts.
“Turning to credit without a plan about how to pay it back can lead to spiraling debt, so it’s good news that the Bank of England and the FCA is looking into how robustly lenders are checking whether people can afford to repay what they borrow.”
Commenting on the figures Peter Tutton, Head of Policy at StepChange Debt Charity, said: “Consumer credit continues to rise rapidly, adding to levels of UK household indebtedness that are already high by historical standards. With the Bank of England Financial Policy Committee highlighting the need for lending standards to be monitored closely, we urgently need action to prevent more households falling into unmanageable debt.
“February saw the highest increase in credit card debt in 11 years and the Financial Conduct Authority has already raised concerns over levels of persistent credit card debt. The FCA is due to announce the next steps from its credit card market study and it has the power to make a difference by ensuring responsible lending standards, banning unsolicited credit limit increases and compelling lenders to intervene early when people fall into difficulty.”