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Seven days: 7 April 2017

Seven days: 7 April 2017

Unsecured credit risk

Some lenders, such as Secure Trust Bank (STB, have already backed out of the unsecured personal lending market. Now the Bank of England’s Financial Policy Committee (FPC) has warned about the risks to banks offering unsecured loans at interest-free rates. The FPC said long interest-free periods for customers moving balances on to new credit cards and higher maximum loans were examples of easier lending conditions, which have pushed up annual consumer credit growth to 10.9 per cent. Interest-free offers are of particular concern because of the way banks account for them, recording interest income even in interest-free periods based on future expected consumer behaviour.

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