Lenders slammed as consumer debt soars

LENDERS have been accused of giving out loans too easily as debt among desperate borrowers seeking help from a Citizens' Advice Bureau rose to "staggering" levels.

LENDERS have been accused of giving out loans too easily as debt among desperate borrowers seeking help from a Citizens' Advice Bureau rose to "staggering" levels.

Leiston, Saxmundham and District CAB has seen the amount owed among its clients increase at an alarming rate over the past year.

Overall, new debt reached nearly £1.3million, or an average of around £18,000 per person in 2004.

This compares with £12,500 the previous year.

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CAB manager Nick Mayo said the figures were "particularly disturbing" in that there would be many more people in difficulties who they were unaware of.

"The average is somewhat distorted by a small number of clients with debts in excess of £60,000, but even if these are excluded, the average remains higher than last year," she said.

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They were "increasingly concerned" about the ease with which clients could get loans and all forms of credit cards, she said.

"We have had cases of single parents living on Income Support, overwhelmed by unrealistic debt repayment plans after accepting loans to clear other debts," she said.

But Brian Capon, head of media relations at the British Bankers' Association, said it was in nobody's interest to lend money to someone who couldn't afford to repay it.

"The Banking Code is clear that banks will properly assess a customer's ability to pay before lending money," he said.

"Mailings offering credit facilities are invitations to apply for credit only – once the application form is returned, a full check is carried out based on information already known to the bank and on information supplied by the customer on the application form."

It is important that people in financial difficulties seek proper professional help as soon as they possibly can, he said.

"Banks will be pleased to work with reputable debt advisers to help them get back on their feet," he added.

Suffolk County Council's trading standards office said it was aware that there was "mounting consumer debt" across Suffolk, but hoped new rules would help ease the problem.

Trading standards officer Steve Greenfield said: "This autumn the laws around credit and credit advertising will be streamlined and more user friendly.

"This should help give consumers the simple information they need to make the right choices when signing up to credit."

Last year, trading standards successfully intervened when a vulnerable resident signed up to £40,000 worth of credit, much of which was unnecessary.

"Trading standards receives numerous complaints about credit and debt each year, the majority of which are about mis-selling of loans, problems with the small print in the contract and extortionate annual percentage rates," he said.

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