This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/6992450.stm
The article has changed 5 times. There is an RSS feed of changes available.
| Version 3 | Version 4 |
|---|---|
| Chancellor warns on consumer debt | Chancellor warns on consumer debt |
| (about 5 hours later) | |
| Chancellor Alistair Darling has urged Britain's banks to take a more cautious approach to lending. | Chancellor Alistair Darling has urged Britain's banks to take a more cautious approach to lending. |
| In an interview with the Daily Telegraph, Mr Darling said both lenders and borrowers needed to "think long and hard" about the risks involved. | In an interview with the Daily Telegraph, Mr Darling said both lenders and borrowers needed to "think long and hard" about the risks involved. |
| He also suggested a return to "good, old-fashioned banking" and voiced concern over loan consolidation TV ads. | He also suggested a return to "good, old-fashioned banking" and voiced concern over loan consolidation TV ads. |
| His comments come amid volatile markets and concerns about the scale of debt taken on by British consumers. | His comments come amid volatile markets and concerns about the scale of debt taken on by British consumers. |
| The chancellor told the Telegraph primary responsibility had to rest with individuals. | The chancellor told the Telegraph primary responsibility had to rest with individuals. |
| Elementary banking | Elementary banking |
| He said: "In crude terms [lenders] need to know who they're lending to, how much they're lending and what the risk is. | |
| "Now, that's elementary banking, one might think, but there are times when going back to good old-fashioned banking may not be a bad idea." | "Now, that's elementary banking, one might think, but there are times when going back to good old-fashioned banking may not be a bad idea." |
| But Mr Darling made no suggestion government would intervene with tighter regulation of lending. | But Mr Darling made no suggestion government would intervene with tighter regulation of lending. |
| Institutions themselves need to open their own eyes and be more honest Alistair Darling, Chancellor Debt: Your comments Send us your comments | Institutions themselves need to open their own eyes and be more honest Alistair Darling, Chancellor Debt: Your comments Send us your comments |
| "My starting point is that government can't stand on the shoes of borrowers or lenders," he said. | "My starting point is that government can't stand on the shoes of borrowers or lenders," he said. |
| "[Borrowers] need to ask themselves, 'Can I repay this?' and lenders need to ask themselves, 'If it goes wrong, can I get it back?'. People do need to think long and hard about this," he warned. | |
| But he did say the Treasury was looking into commercials - "the sort you see on daytime TV" - which encourage consumers in debt to consolidate their loans. | But he did say the Treasury was looking into commercials - "the sort you see on daytime TV" - which encourage consumers in debt to consolidate their loans. |
| Experts have warned such schemes can actually push households further into debt. | Experts have warned such schemes can actually push households further into debt. |
| 'More honesty' | 'More honesty' |
| He added that banks themselves may bear some of the responsibility for people getting into problems with debt they cannot handle. | He added that banks themselves may bear some of the responsibility for people getting into problems with debt they cannot handle. |
| "Institutions have in some cases been prepared to lend to people without actually checking if they were ever going to repay it," he said. | "Institutions have in some cases been prepared to lend to people without actually checking if they were ever going to repay it," he said. |
| He also suggested the City and financial institutions should take a more sceptical approach to new and complex financial instruments which appear to offer spectacular rates of return. | He also suggested the City and financial institutions should take a more sceptical approach to new and complex financial instruments which appear to offer spectacular rates of return. |
| Recent cases have shown such instruments have turned out to be backed by risky loans to sub-prime home-buyers in the US. | Recent cases have shown such instruments have turned out to be backed by risky loans to sub-prime home-buyers in the US. |
| Banks try to only lend responsibly but often they have been dazzled by the technology and forgotten to eyeball the customer Malcolm Hurlston, Consumer Credit Counselling Service | |
| He told the newspaper: "Institutions themselves need to open their own eyes and be more honest. | He told the newspaper: "Institutions themselves need to open their own eyes and be more honest. |
| "When someone comes up with a fantastic way of making money they need to ask, how is this money being made and what are the risks?" | "When someone comes up with a fantastic way of making money they need to ask, how is this money being made and what are the risks?" |
| 'Stigma' | |
| Mr Darling's comments were welcomed by the Consumer Credit Counselling Service, which advises those in financial difficulties. | |
| "Banks try to only lend responsibly but often they have been dazzled by the technology and forgotten to eyeball the customer," said chairman Malcolm Hurlston. | |
| "There should also be responsible borrowing but consumers can be led astray by emotions - not helped by cynical advertising on daytime television, as highlighted by the Chancellor, with for-profit providers offering minority solutions to mass problems." | |
| The director of public policy for Citizens Advice, Teresa Perchard, said that a campaign to inform people about better lending and borrowing habits was needed if behaviour was going to change. | |
| "The Chancellor is right to highlight the need for more responsible lending by banks and credit providers," she said. | |
| "Borrowers and lenders need to go into lending with their eyes open. The impact of unmanageable debt on individuals is severe and long-lasting. For some it means bankruptcy and years of stigma." |