Credit Card Checks Not Up to Scratch

Online comparison site, uSwitch, has revealed that a staggering 96% of UK credit card applicants did not have to disclose their earnings nor provide proof. Research from uSwitch has revealed that prospective credit card lenders did not ask almost all those applying for a card to provide proof of earnings.

This is a risky strategy by credit card lenders as the borrowing limit for new card customers, on average, represents 14% of the average annual salary in the UK. uSwitch has called on banks to be more responsible with regards to its lending practices.

The research shows that income and affordability checks conducted by card issuers are "woefully inadequate", according to the comparison site. Nick White, uSwitch.com's Director of Personal Finance, said the problem required addressing and that the study was not intended to sensationalise the problem.

To help combat the problem, uSwitch feel that the introduction of compulsory income and affordability checks for unsecured lending products, will have a positive effect.

Mr White said: "It's nothing short of irresponsible for providers to grant applicants living on less than the average wage credit limits which they would never be able to afford and in many cases tie them to a lifetime of debt."

However, the report from uSwitch has prompted an angry response from the British Bankers Association, who refutes the comparison site's allegations of "binge lending practices".

"uSwitch has again misrepresented the facts and got its sums seriously wrong," said Angela Knight, Chief Executive designate for the BBA.

However, Mr White added: "We are just raising an issue that needs to be resolved to ensure that adequate remedies are put in place to stop the UK debt epidemic from claiming any further victims."

Tom Smith
8th February 2007

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