Bank customers going bust in record numbers

[internecine]

Bank customers going bust in record numbers

Struggling Britons, who are weighed down by loans and credit card debt, are going bust in record numbers.

HSBC today revealed that it has been forced to write-off £2 billion in the first half of this year - much of it loaned to British customers.

The bank pointed to rising levels of bankruptcy and the number of people reduced to taking out debt repayment plans.

HSBC today warned that 'serious' and 'excessive' levels of consumer debt in the UK was a growing issue.

While the bank said it has deliberately reduced its share of the unsecured lending market, loans and credit cards, as a result.

However, the decision looks like closing the stable door after the horse has bolted. There is a raft of evidence that high street banks have been guilty of reckless lending over the past 4-5 years.

Money and credit cards have been chucked at customers without proper checks on their ability to repay. This, in turn, has generated the phenomenon of the 'debt suicide'.

For there have been an alarming number of deaths among people of all ages who have amassed debts running into tens of thousands of pounds despite having modest incomes.

The £2 billion figure amounted to a rise of 19per cent on the same period last year. Similar evidence of rising bad debt is expected from the other banking giants who are reporting figures this week.

HSBC said: 'In the UK, the unsecured personal sector again contributed the major portion of the impairment charge in the period, largely as a result of rising bankruptcy filings and individual voluntary arrangements.

'Although the charge was considerably higher than the first half of 2005, it was in line with that incurred in the second half of last year.'

It added: 'Excessive consumer indebtedness is increasingly an issue in the public domain.'

HSBC admitted an obligation to deal with the issue. It said it was the first major UK bank to share positive credit information on customers.

This gives banks a better picture of customer's finances and so means they are less likely to lend more money to people who are in trouble with repayments.

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