Lenders not carrying out proper checks into income

According to a recent report many consumers may have been handed out loans from lenders without adequate checks first being carried out into the information provided on their application forms, in particular their income. It is estimated that around £20 billion worth of unsecured loans may have been granted without proper checks being carried out with regards to proof of income from the applicant.

Research was carried out by uswitch.com, showing that around £20 billion worth of unsecured finance may have been given out to consumers over the past year alone, without any checks being carried out into the applicant’s income. In fact, the report suggests that in some cases applicants were not even asked about their income levels on their applications.

This is particularly worrying bearing in mind that lenders are supposed to be tightening up on their credit criteria as a result of the global credit crunch, as well as the fact that bad debt levels in the UK have been rocketing over recent years. Some lenders have claimed that the reason so many people are not asked about their income is because they apply through their own banks, who already have their income details, but research shows that in many instances this is not the case.

One uswitch.com official stated: “With more than 7716 loan repayments being missed every day, and record write offs, you might thing that lenders would have learned their lesson but the potential profits have clearly been too good to resist. While the credit crunch has forced lenders to tighten up their lending criteria these latest amendments to the Banking Code do not go far enough to help promote responsible lending in all cases.”

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