The number of people taking out IVAs has risen dramatically over the past year and a host of banks and lending organisations have expressed concern that something should be done to stem the tide.
Now reports have suggested the British Banking Association (BBA) is planning to clamp down on lending to certain sections of the population as a way of tackling the problem.
Mike Fry, director at Halton Insurance Service, believed action needed to be taken.
He said: “I have always advocated that lenders should be more stringent when it comes to lending, especially on credit cards, as some people have no financial management skills so they spend the money like a blank cheque and get into debt. There needs to be some sort of policing and I’m keen on restraints to help alleviate the problem.”
However, Linda Will, managing director at Accord Mortgages, believed that while a crackdown on the number of IVAs was needed, the concerns were aimed at the wrong area of society.
She said: “The government changed the rules to make it easier for people to take out IVAs on their personal debt and there must come a point where lenders have to take action. However, how are they going to crack down? It isn’t poor people who always find themselves in trouble. One-in-six people who take out non-conforming lending are in the AB social group and no mortgage lender can predict when someone is going to lose their job or get divorced.”
Paul Walshe, head of lender services at Moore and Blatch Solicitors, also expressed concerns.
“It is difficult to envisage a clamp-down, as imposing regulation will be difficult and lenders will resist being told who they can lend to. Changes made to the rules have contributed as people are coming out of debt quicker and lenders have also been loose in their lending.”
