Why are we in a culture of irresponsible lending?

In recent years, there’s been a stark rise in irresponsible lending in the UK finance industry, forcing regulators to examine the existing lending criteria adopted by banks and other finance companies.

 

This is mainly due to the fact that there has been significant evidence to suggest that lenders are not carrying out adequate checks when it comes to lending money responsibly.

 

As a result, more borrowers than ever before are being approved for loans that they simply cannot afford to pay back due to the fact that lenders have done very little to establish their financial situation.

 

From paper-thin credit checks through to inadequate means-testing, customers are being approved for debt that is landing them in deeper water financially or leaving them in a situation where they cannot repay the loan.

 

 

What is irresponsible lending?

 

Whatever type of credit you are applying for, it’s crucial that checks are carried out to determine whether or not you will be able to pay back the money you are lending.

 

So whether it’s a loan or other type of credit agreement, the lender should take the necessary steps to assess whether the agreement is actually manageable. This involves checking your credit file, asking questions about your annual income, as well as your monthly outgoings.

 

Failure to carry out these checks is classed as irresponsible lending and can have huge financial implications on the borrower, forcing them to cut essential living costs or in some cases resulting in the default of their account.

 

Although banks have been known to lend irresponsibly, it is payday loan companies that have hit the headlines in recent years for lending money that borrowers cannot afford to pay back.

 

 

What is responsible lending?

 

Responsible lending is when the borrower acts in the best interests of the customer by ensuring that they can afford to pay back the money they borrow. But that’s not all… it’s important that lenders also adopt a transparent approach when it comes to explaining to their customers what they are signing up to and whether or not the loan or credit agreement is suitable for their circumstances.

 

If your debt is getting out of control, the FREEZE app can help you find a solution. Answer two simple questions and have a solution within 24-hours. You can also speak to our expert team for free debt advice. Download the app today from the App Store or Google Play.

 

You can also visit the Money Advice Service or Direct GOV for further impartial money advice.

Get Debt Help now with The freezE App

Get help now with FREEZE. We’re here to help you find a debt solution and put your mind at ease. Download the app and start your journey to becoming debt free!

 

 

Freeze Debt Ltd is registered in England and Wales. Registered Number 11842271. Incorporated in England and Wales, with company number 11842271 and having its registered office at Ambler House, Trevelyan Square, Leeds LS1 6ED.  Freeze Debt Ltd is an Appointed Representative of Blackberry Finance Limited. Our Firm Reference Number is 840092. You can check these details on the register: https://register.fca.org.uk.

Jason Peter Bowen is Authorised to Act as an Insolvency Practitioner, in the UK, by the Insolvency Practitioners Association, IP Number 22150. All Insolvency services are provided in partnership with The Debt Resolution Service. The Debt Resolution Service is registered in England and Wales. Registered Number12692223 and having its registered office at Mills Hill Works, Corbrook Road, Chadderton, Oldham, OL9 9SD.

 

Freeze Debt provides insolvency solutions to individuals throughout the UK. 

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