Banks defend accusation of failing to carry out credit checks

A recent report claimed that banks were failing to carry out adequate credit and financial checks on those applying for finance such as credit cards.

According to some claims, banks fail to take proof of earnings from applicants in order to back up how much they are earning and what their outgoings are. This, it was claimed, could be leading to rising consumer debt levels, with many people that take on finance unable to keep up with repayments.

The lack of information taken by banks and financial institutions when people apply for credit means that the lender is not really aware of whether the applicant can realistically afford the keep up with repayments, and to some this could be construed as irresponsible lending.

Although some banks are now being far more cautious when it comes to who they will lend money to, mostly due to the high levels of bad debt that are affecting bank profits, in many cases the damage has already been done and people are being left to cope with enormous debts that they simply cannot afford based on their income and outgoings.

However, in response to these claims and accusations the British Bankers' Association has spoken out to defend the industry. The recent report relating to the failure of banks to obtain adequate information came from figures presented by USwitch, but the British Banker’s Association claims that these figures were mis-represented.

Angela Knight, speaking on behalf of the British Banker's Association, stated:  "Before issuing cards, providers routinely share data and look at any applicant's previous banking track record to assess the ability and likelihood of new customers to pay back any money they borrow."

Tom Smith
24th February 2007