Bank of England clamps down on credit

Nonetheless, the Bank of England is concerned that, across banks overall, lending standards are slipping.

Banks have to hold capital against their loans to ensure they can cope with losses if customers fail to repay the debts.

For credit cards, the risk weight applied by banks has fallen from 92pc to 85pc of the loans, and for other consumer credit it dived from 109pc to 92pc between 2014 and 2016.

Officials are supposed to pick up on these risks before it is too late, and indeed that is the way the Bank of England has framed its interventions in the market – they are stepping in now to pre-empt a boom and bust in the consumer credit market.

“One needs to look at this question of whether underwriting standards are starting to slip and whether there is a risk of this growing too fast,” says Sir Jon Cunliffe, deputy governor for financial stability.

“I think if you put it over the general picture, we’ve been watching it for over a year or two now, and this just seems the point now to check on underwriting standards, and then bring forward the stress test so that we can look to see whether as the stock turns over, the risks are growing.”

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