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Banks are making inconsistent progress on responsible lending to
consumers, according to one of the UK’s biggest SRI fund managers.
Henderson Global Investors says its engagement with high street banks during the past year has revealed pockets of good practice but not enough action. Last year Henderson wrote to the chief executives of high street banks asking them what they were doing on responsible lending – and then met the banks to discuss their actions in more depth.
It found that although the banks’ approaches to over-indebtedness and responsible lending have much in common, there are significant differences. Some are waiting for the industry as a whole to act while others are willing to do so on their own.
Those it found to be taking a positive approach were Abbey, Barclaycard, Co-operative Bank and Egg, which have agreed to share data on customer repayment behaviour.
Henderson also praised HBOS and HSBC for choosing not to issue unsolicited credit card cheques, which have been criticized by a Treasury committee for having high charges that are not clear to consumers. However, Henderson says there is much more that banks can do, such as restructuring sales bonuses to avoid over-selling that leads to debt, and improving customer information on loan rates.
Consumer debt is at an all-time high of more than £1trillion ($1.75trillion) and in March the Office of Fair Trading UK said legislation was needed to protect consumers using credit card cheques. Henderson recently wrote again to all the banks asking for more feedback and will continue to seek improvements.
Henderson Global Investors says its engagement with high street banks during the past year has revealed pockets of good practice but not enough action. Last year Henderson wrote to the chief executives of high street banks asking them what they were doing on responsible lending – and then met the banks to discuss their actions in more depth.
It found that although the banks’ approaches to over-indebtedness and responsible lending have much in common, there are significant differences. Some are waiting for the industry as a whole to act while others are willing to do so on their own.
Those it found to be taking a positive approach were Abbey, Barclaycard, Co-operative Bank and Egg, which have agreed to share data on customer repayment behaviour.
Henderson also praised HBOS and HSBC for choosing not to issue unsolicited credit card cheques, which have been criticized by a Treasury committee for having high charges that are not clear to consumers. However, Henderson says there is much more that banks can do, such as restructuring sales bonuses to avoid over-selling that leads to debt, and improving customer information on loan rates.
Consumer debt is at an all-time high of more than £1trillion ($1.75trillion) and in March the Office of Fair Trading UK said legislation was needed to protect consumers using credit card cheques. Henderson recently wrote again to all the banks asking for more feedback and will continue to seek improvements.
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