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Irresponsible Lending: Could You Be A Victim?

Irresponsible lending by the consumer credit industry has been in the news a lot recently, with a particular focus on payday loan providers. And whilst it looks like lending practices may be improving, there are still plenty of instances where people have been ‘allowed’ to rack up unsustainable debts by irresponsible providers which they now can’t afford to repay.

irresponsible lending

Guardian readers may already be aware of the case of Don Brignell, a 95 year old pensioner who ran up £80,000 worth of debt across 10 different credit card providers – and who was repeatedly approved for new cards, despite have a monthly pension of just £1,200. Don died last year and it now falls to his son, also called Don, to deal with his late father’s debts, and the never-ending demands from credit card companies and debt collection agencies

 

The credit cards in question were opened over a 20 year period, at the beginning of which Don senior was already aged 75. At that time, typical interest rates could be as high as 30% APR, so it’s easy to see how Don’s debts got out of control. Like many people in this situation, Don started opening new accounts to pay off old ones – but only ever made the minimum payments, or no payments at all, so the debts just kept growing. His son says he has no knowledge of the problem and only discovered it when he looked into his late father’s affairs.

 

Of course, back in 2004 when Don senior started applying for credit cards, lending practices were somewhat more relaxed than they are today. Having said that, the companies he was applying to could access information about his borrowing habits by viewing his credit file. This would have included details about the number of cards Don already held, his credit limits, average balances and payment history. It would also have shown that he still had an outstanding mortgage of £10,000 up until his death.

 

So why, when the companies knew all this, did they ignore the warning signs and keep lending to him? Andy Gorton, owner of debt counselling firm, Fresh Finance, comments: ‘Don’s case is unusual because of his age – but it’s not unusual in terms of the problems that have arisen as a result of lending practices that were commonplace at that time. The sad truth is that Don’s credit card lenders had the information they needed to make a responsible decision NOT to lend to him, but either misinterpreted or ignored it.

 

Whilst some of Don’s creditors have written off his balances, others are still trying to take legal action to recover monies from his estate. Don junior has now referred the case to the Financial Services Ombudsman, who will make a final decision about whether or not Don’s remaining credit card debts should be cancelled.

 

Adds Andy: ‘Serious debt problems due to repeated and inappropriate lending by credit card providers are now less common than they were. But according to the debt charity StepChange, 64% of the people they helped with credit card debt last year had at least two accounts, and owed an average of £24,600 – just £1,400 less than the UK’s average salary level.’

 

Could you be a victim?

There are a few indications that your creditors may have lent to you irresponsibly. These include not checking your ability to repay a loan before giving you the money, constantly increasing your credit limit, or opening new accounts when your finances are already over-stretched. Or you may have been given misleading information about a product through dubious marketing or advertising techniques.

 

If you think you might be a victim of irresponsible lending and now can’t afford to repay your debts, you can contact the Financial Services Ombusman if your lender won’t help. If the FSO rules in your favour, the debts in question may be cancelled and you may receive compensation. However, if it turns out that your lender(s) did act responsibly, you’ll have to find a way to repay them.

 

Ask Fresh Finance for debt help

Here at Fresh Finance, we’ll help you find the best way to get out of debt. Our trained advisers will discuss your circumstances in detail, explain your debt management options and then guide you through the next steps when you’ve made your decision. Whether you choose informal Debt Management, a legally-binding IVA or bankruptcy, we’ll arm you with the information, advice and support you need to make a fresh financial start.

 

Contact us today

Call Fresh Finance today on 0808 168 8262 or complete our online enquiry form and we’ll get back to you as soon as we can.

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