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Loans code 'should be changed'

People taking out unsecured loans - also known as personal loans - should make sure that they are in a position to make all the repayments, financial website uSwitch has warned.

The price comparison firm also criticised the fact that recent changes to the Banking Code did not increase protection for unsecured loans customers.

In particular, uSwitch wishes to see an amendment to the guidelines which would oblige unsecured loans firms to undertake extra credit checks on customers.

This in turn should lessen the likelihood that customers allowed to take out a loan would later prove to be unable to pay.

Mike Naylor, a personal finance expert at the firm, commented: "While the credit crunch has forced lenders to tighten up their lending criteria, these latest amendments to the Banking Code do not go far enough to help promote responsible lending in all cases."

Research from uSwitch also shows that 4.1 million unsecured loans were issued in the UK last year, collectively worth around £30 billion.

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