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Lenders Need to Adhere To Responsible Lending Guidelines

Article Summary: All loan providers should follow the banking sector’s code for responsible lending, an industry expert has suggested.

All loan providers should follow the banking sector's code for responsible lending, an industry expert has suggested.

According to Angela Knight, chief executive of the British Bankers' Association (BBA), credit suppliers who exist outside of the industry should be made to follow the Banking Code. Consequently, Ms Knight purported that consumers could receive greater protection as lenders will only issue money to those who meet certain repayment criteria. She added that otherwise borrowers could soon become "overstretched" and develop "serious" difficulties in making payments on personal loans.

The BBA chief executive, claimed in a letter to the shadow treasury minister, Mark Hoban that: "When a gap opens between what a borrower wants and what a bank wants to lend, too often an irresponsible lender steps in. Only around 63 per cent of unsecured borrowing now comes from the banks. There are certainly responsible lenders among the rest, but how is a consumer to know who they are or what their lending rules are?"

Her comments came as she suggested that non-banking lenders are making up for an increasing proportion of loan and credit deals taken up by Britons. She also claimed that a rising number of suppliers are offering loans to those borrowers who previously did not meet their bank's criteria.

The association reported that lending, when issued and used wisely, "has empowered generations" by giving them the chance to buy goods and services which otherwise could be beyond their reach. Meanwhile, borrowing was said to be "a very sensible tool" in spreading out the cost of purchases over several months, yet Britons were warned to make sure that they "remain in control" of their spending. It is advised that debtors who are unable to make the repayments to their various creditors, should either arrange a manageable payment plan with their providers, seek independent professional advice, or consider a debt consolidation loan.

As a result, BBA advised consumers looking to take out a loan to "trawl through" credit deals advertised by suppliers online and in the press to ensure that they find the most appropriate product for them. It is recommended that borrowers should consider various aspects of any agreement including, the cost of minimum monthly repayments, any fees and the annual percentage rate APR, it is also advised they should ask for a quote.

In recent figures released by the association, a rise was noted in money issued through secured loans. During the month of May around £19.7 billion was lent out to consumers - an increase of some eight per cent from the same month last year. The BBA also indicated that the average loan per house purchase stood at £157,100, 13 per cent higher than last May. However, lending via credit cards was reported to have fallen by £0.4 billion over course of the month. Director of statistics for the BBA David Dooks claimed that the fall in card expenditure was due to a rising willingness among Britons to pay for goods upfront rather than borrow money. At the same time overdraft and personal loans lending was reduced by £0.1 billion.

Article Source: http://www.upublish.info

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Abbi Rouse
Abbi Rouse writes for All About Loans. Our visitors can apply online for bad credit secured loans. We also specialise in cheap loans, and debt consolidation loans. http://news.allaboutloans.co.uk