Latest Debt News
FSA fears over consumer debt
26/01/2006 13:35:00
A "significant minority" of consumers may be struggling with high levels of personal debt, the financial services watchdog has warned.
The Financial Services Authority (FSA) has advised lenders against allowing consumers to over-burden themselves with high debt repayments.
The FSA warns banks, building societies and other finance houses that their reputations could be severely damaged if "they have given credit to large numbers of consumers who are unable to afford their debt repayments".
The FSA's Financial Risk Outlook 2006 report, detailing the likely risks facing the financial services industry over the next 18 months, warns that many consumers are struggling to stay on top of existing debt repayments.
It reports increasing signs of consumer distress, marked by more insolvencies, an increase in late payments and a rise in mortgage repossession orders.
It warns that existing household debt problems, combined with the predicted economic slowdown, may exacerbate many people's personal finance difficulties.
A recent study by the price comparison site uSwitch highlighted concerns that many lenders are not asking borrowers for evidence of their income, meaning that many consumers may be taking out loans they cannot afford to repay.
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