The lenders are underestimating the success that they would make consumers default on debt in a downturn, according to the Bank of England.
The Bank’s Financial Policy Committee (FPC) said that there were “pockets of risk” in the current level of loans, borrowings, bank overdrafts and credit cards.
It is estimated that in a “major crisis”, the UK banks could suffer losses of Â£30 billion.
It is the equivalent of 20% of the UK consumer credit loans.
The work commitments of the law to cut credit card debt
Lenders told to be careful about loans
The findings have been disseminated in a press release issued Monday, following the FPC meeting on Wednesday.
The Bank has always expressed the need for vigilance on the growth in the market of consumer credit in the course of “benign” economic conditions.
This has been repeated, although the FPC has said that it was important for the resilience of banks in periods of economic downturn, rather than a threat to the economy as a whole.
“This is not a significant risk to economic growth, as consumer credit represents only 11% of the total household debt,” the statement said.
Earlier this summer, another Bank of weapons of the Prudential Regulation Authority – ordered banks to respond to certain concerns about the treatment of consumer credit. The Bank also said that lenders beef up their finances against bad loans.Credit card cap
Consumer credit, which also includes the automotive financing, has increased 9.8% year over year in July, but has been in double figures in the recent period.
This has raised fears of the debt charities that the families rely on the debt at a time of low wage growth, potentially storing up financial trouble for later.
At its party conference, Labour promised that he was going to introduce a law to limit the interest on credit card debt.
The City regulator, the Financial Conduct Authority said that over three million people are in the persistence of the debt, which it defines as having paid more interest and fees that they have paid back their loan over a period of 18 months.
Labour has said its “cost cap” would “tackle the persistence of the spiral of debt’, saying growth of consumer debt was becoming a “threat to our economy”.
UK Finance, which represents the financial and banking sector, said: “The last thing the industry wants is to see those who are the most vulnerable to being pushed into the hands of unscrupulous and unregulated lenders.”
The Conservatives have said that measures are already in place.