Responsible Borrowing and Lending in the UK

Abstract

The UK has generally had a relatively ‘light touch’ regulatory framework for consumer credit, with the onus on the individual to behave responsibly when taking out unsecured loans. Concerns have however recently grown regarding the provision of short-term, high-cost credit, with the actions of the lending institutions frequently labelled as irresponsible, exploitative and predatory. As a result, the legal and social obligations on lenders have been subject to significant analysis and reform. While the responsibility of lenders is an important issue for discussion, this paper focuses on the responsibilities of borrowers looking at the issues from a legal and social policy perspectives. It begins with a discussion of individual responsibility and what might constitute ‘responsible borrowing’ before applying this concept to the use of high cost credit. The paper draws on a range of literature on the topic from both a legal and social policy perspective, as well as analysing interviews with forty-four borrowers to examine the nature of responsible borrowing from a consumer perspective.