Responsible lending

The level of unsecured consumer debt remains a high-profile issue in a number of countries, but attention turned from consumer lending in the UK to mortgages in the USA as the credit crunch hit in late 2007. Barclays Capital subsidiary HomEq Servicing became a founder member of the HOPE NOW Alliance formed in the USA in October to help struggling homeowners meet rising mortgage payments.

In the UK, our policy on mortgage arrears is to contact customers early to ensure that arrangements to help them are put in place quickly.

Following criticism of Shared Appreciation Mortgages (SAMs), products we sold in 1998, we introduced a hardship scheme for customers voluntarily. The scheme offers SAMs holders who are suffering hardship, interest-free loans to move into a more appropriate property. Those who do not wish to move can apply for a one-off, non-repayable grant to adapt their current home. So far, 80% of applications for assistance have been approved based on the criteria for the scheme.

Strict lending criteria

Although the market for commercial loans became tighter in 2007, UK Business Banking relaunched as Barclays Commercial Bank in November and remained very much 'open for business' for our corporate customers.

Barclaycard in the UK enforced strict criteria on new card applications, using a scoring system that takes more than 400 variables into account when assessing applicants' ability to manage debt. Around 50% of applications are declined as a result.

During 2007, we continued to work on the behavioural data-sharing collaboration we helped initiate with APACS, the UK payments association. Sharing this additional data will give lenders a greater pool of information on which to base lending decisions and identify customers in danger of future debt problems.