The Governor reviews the rapid growth of personal borrowing over recent years and, while welcoming the benefits of greater competition in the provision of personal credit, points up some possible problems which banks and other lenders will need to address. He warns that historical default experience may not necessarily provide a satisfactory guide to the future. High interest rates, the higher level of indebtedness and slower economic growth could all contribute to an increase in the incidence of payments difficulties, which would call for restraint and sensitivity on the part of lenders: and lenders will need to keep their procedures both for granting and for monitoring credit under review to ensure they are adequate for changing circumstances. The Governor goes on to review the implications for monetary policy of higher consumer indebtedness.
Personal credit problems - Governor's speech