The recent news that there has been a significantly authoritative input from the Financial Services Authority has proven to be a catalyst for the recognition of our collective abuse of systems of credit. In the United Kingdom, in particular, there has been a continued rise in the rate of consumer credit attained, with the FSA now consciously attempting to tighten controls and enforce restrictions on credit card lending.
What does this mean for those who did not abuse credit throughout the boom prior to the recession and what are the consequences for those already struggling under a weighty burden of debt? David Brown reports.
Contrary to what would seem to be common sense within the financial sector, the Financial Services Authority have put a squeeze on the tentatively recovering mortgage market ruling a ban on self-certification mortgages. These mortgages, according to Tracy Corrigan of The Telegraph, were among the myriad products abused prior to the collapse of the economy.
Understandably, the FSA have governed this in response to individuals finding themselves unable to maintain their repayments of credit granted under these mortgages. Its aim now is presumably to action similar sanctions on the wider problem within the UK economy: credit card debt.
With regulations already having affected banks’ willingness to increase and diversify their lending behaviours, the consumer is ultimately suffering. For those who remained sensible with credit, it would appear that restrictions are taking a discriminatory edge, as financial institutions have been hit by select consumers’ inabilities to effectively manage their debt.
There has been a proportionate rise in the numbers of IVAs (Individual Voluntary Arrangements) taken out and whilst this is seen to be an honourable way of failing to meet debt repayments, it remains indicative of the inherent consumer credit crisis being experienced. The FSA’s tightening grip on credit cards especially may cause more cases of debt management”, however it is yet to be seen whether this will precede a change in attitude in both institution and consumer markets.
This article was written by David Brown on behalf of IVA.net – a website providing individuals in financial difficulties with free, no-obligation information, tools and guides on how to better manage their debt.
About David:David Brown is a freelance journalist who writes and publishes articles on behalf of IVA.net - a company who provide free information, tools and guides on how to manage and eliminate debts successfully. In his spare time, David enjoys sports such as rugby and Formula 1, and reading sci-fi novels.
See Other Articles Posted By David Brown
