Irresponsible lending contributing to spiralling consumer debt, says Citizens Advice

Today the Bank of England consumer credit statistics show that consumer borrowing has risen by 9.8 % in the year to August 2017, and now stands at £203 billion.

In August, research from Citizens Advice revealed that 1 in 5 people struggling with credit card debts had their credit limit raised without them requesting it - showing that lenders were increasing people’s access to debt without the proper affordability checks.

As the Bank of England urges banks to protect themselves from people defaulting on credit agreements, Citizens Advice is asking the Financial Conduct Authority (FCA) to make sure people aren’t being offered unaffordable debt.

Gillian Guy, Chief Executive of Citizens Advice said:

“It’s clear that irresponsible lending is contributing to the rising levels of consumer debt.

“Our evidence shows that people who are unable to pay off their credit card debts are having their credit limit raised without them requesting it - which risks pushing them further into debt.

“It’s essential that lenders carry out thorough affordability checks before giving people more credit so that borrowers aren’t led deeper and deeper into debt.

“With prices rising faster than wages, household finances are increasingly stretched meaning debts that seem affordable now may be unmanageable in future. The FCA should step in to protect borrowers by banning credit card companies from automatically raising credit card limits and making lenders support customers who are starting to struggle.”

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.