Moneyway has ceased offering unsecured consumer lending in concerns over ‘aggressive’ pricing by banks.
The lender’s parent, Secure Trust Bank told Motor Finance that it was concerned about “increasingly aggressive competitive practices,” with lenders offering ever-cheaper loans to compete for customers at a time of economic uncertainty.
Paul Lynam, chief executive of Secure Trust Bank, told Motor Finance: “An ever growing number of lenders, striving for new business volumes, are exerting downward pressure on lending margins and credit underwriting standards.
“This cohort of lending is particularly exposed to credit losses in scenarios where GDP growth slows, household debt continues to rise, disposal incomes get squeezed, interest rates increase, and unemployment levels rise. Several of these scenarios are now being forecast by the Bank of England amongst others.”
Lynam told Motor Finance that existing unsecured personal loans would run their course, and stressed that they “remain highly committed” to their motor finance business, noting that it carried different credit risk dynamics.
He said that Moneyway would return to the unsecured consumer lending market once it became more sustainable, and stated their parent bank would “continue to invest heavily for future growth” in other areas.