Written question asked by Lord Myners (Crossbench) on Tuesday, 10 May 2016, in the House of Lords. It was due for an answer on Tuesday, 24 May 2016. It was answered by Lord O'Neill of Gatley (Conservative) on Thursday, 12 May 2016 on behalf of the Treasury.

Credit

Question: To ask Her Majesty’s Government what assessment they have made of the growth in private sector credit; the use of lending strategies by banks; payday lenders and peer-to-peer lenders; and risks to family finances and financial stability.

Answer

Private credit growth grew at 3.7% in the year to March, below the 2003-08 average of 11.5%. Industry sources such as Nesta estimate that peer-to-peer lending for consumers and business facilitated £2.4 billion of gross lending in 2015, 85% higher than in 2014. The volume of payday lending fell 35% in the first six months after the government transferred regulatory responsibility of the consumer credit market to the Financial Conduct Authority in April 2014.

The government created the independent Financial Policy Committee (FPC) to ensure we don’t repeat the mistakes of the past, and they have judged that financial stability risks from domestic credit growth are not elevated. The FPC has already taken action on loan-to-income ratios and mortgage affordability to ensure against risks from indebted households, and interest payments as a proportion of household income have fallen to a record low of 4.7% in Q4 2015, compared to 10.6% in Q1 2008.

Secondary information

Type: Written question
Reference: HL8288
Session: 2015-16
Subjects: Credit
Link: View this Written question on www.parliament.uk

Credit

Secondary information

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