Increasing bad debt provisions are forcing lenders to reassess lending rules and look to ensure acquisition strategies do not lead to bigger books of bad debt, says consultant Datamonitor.
It estimates average UK personal debt is up 20% overall since mid-2004.
Average unsecured debt per adult stands at £4,021, up 33.5% since 2001, leaving many consumers struggling.
The industry meanwhile is suffering from the increasing load that bad debt provisions incur, with Bank of England data suggesting unsecured debt write-offs jumped by 27.6% to £3.7bn in the first three quarters of 2005 compared with the same period one year earlier.
Datamonitor says interviews with lenders suggest they will turn away increasing numbers of customers through stricter lending criteria, while some are focusing on cross-selling to their existing customer base.
Either way, consumers with less than stellar credit records “may find it more difficult to get access to cheap credit,” Datamonitor states.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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