Bank of England warns lenders over easy credit for consumers
Companies ordered to apply the rules more prudently and think harder about their lending assumptions
London — The Bank of England (BoE) took a tougher approach towards banks over their booming lending to consumers on Tuesday, ordering them to apply credit rules prudently and prove by September they are not being too complacent about risks to their balance sheets. The BoE, which has powers to force firms to curb their lending, said last week it had spotted weaknesses in the way companies had been ramping up their offers of credit to consumers, who are the main driver of Britain’s economy. Consumer borrowing is growing at more than 10% a year, while the household savings rate has hit a record low, raising concerns that some Britons are overstretching themselves and could struggle to make repayments if interest rates rise. The BoE’s Prudential Regulation Authority (PRA) did not set out any new rules on Tuesday, but the move was the first time it has ordered firms to apply consumer credit rules more conservatively and think harder about their lending assumptions. It is also making comp...
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