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

By agency reporter
July 31, 2018

The  Financial Conduct Authority (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 per cent 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 per cent 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."

Figures from Citizens Advice Walking on Thin Ice report this year show:

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

* Read the report Walking on Thin Ice here

* Citizens Advice https://www.citizensadvice.org.uk/

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