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Citizens Advice responds to latest Bank of England consumer credit figures and FCA creditworthiness statement

30 Gorffennaf 2018

This morning the FCA have published their ''Assessing creditworthiness in consumer credit' policy statement. It coincides with the Bank of England revealing the amount of credit held by UK households increased by £3.7 billion in June and the rate of credit card lending has risen by 11% in the last three months.

In response, Gillian Guy, Chief Executive of Citizens Advice, said:

"People's finances are increasingly stretched with many turning to credit to make ends meet. Our figures show 25% of UK households with a volatile income used credit to pay for essentials such as food and bills. In the last year, we helped 125,000 people with consumer credit issues.

"This morning the FCA has been explicit that lenders must carry out a credit check before a credit limit is increased from November 2018. Last year, nearly 6 million people were given extra credit they had not asked for, encouraging them to fall into unnecessary debt. This must stop.

"Lenders need to be serious about safeguarding their customers from future problem debt by only lending what people can afford to repay. We find that even £100 or £200 here and there can quickly mount up and become difficult to manage. Lenders should support their customers when they spot warning signs by steering them to free debt advice services, including Citizens Advice."

Background

Figures from our 'Walking on Thin Ice' report this year show:

  • 35% of UK households are susceptible to a 25% change in their income from year to year.
  • One in 10 households spends 80% of their income on essential items like food, transport and bills.
  • One in four (25%) people with a volatile income used their overdraft or credit card to pay for essentials.
  • More than one in 10 (13%) UK adults said their income varied significantly from month to month - rising to almost half (49%) for people who are self-employed or in insecure work.
  • One in five (21%) people with a volatile income said they went without food or other essentials in order to pay their bills last year.

Notes to editors

  1. The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  2. The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  3. To get advice online or find your local Citizens Advice in England and Wales, visit citizensadvice.org.uk
  4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
  5. Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.
  6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.