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The Office of Fair Trading has begun to look at irresponsible lending in UK consumer credit sector.

This comes as over a quarter of Brits blame banks for today's financial mess - almost everyone says they have had their credit limits raised without even being asked, according to fool.co.uk.

Although it is lenders who have been the instigators of the credit crunch, consumers believe society is as much to blame as the Government or the banks. The website says one in five people place responsibility squarely on the shoulders of the Government.

One in four Brits blame themselves, and another one in four reckon consumer culture is culpable. They believe our quick-fix shopping culture has forced people to take on unnecessary debt.

According to the Bank of England, fresh mortgage approvals has slumped 70%. It is down from £17 billion a year ago to £5 billion in June. Meanwhile, total lending over the same period has halved from £31.7 billion to £16.8 billion.

Fool.co.uk has revealed that the investigation by the Government couldn’t come sooner - one in nine people were given credit even though they had a bad credit rating. Elsewhere, almost half say they have been offered credit they knew they couldn't repay.

Despite pointing the finger at banks and their irresponsible lending, three out of four admit that they don't read the small print when signing credit agreements. Furthermore, half claim to have used one form of credit to pay off another.

David Kuo, head of personal finance at Fool.co.uk, says: "Both the banks and the Government have to take equal responsibility for the credit crunch - banks for peddling unaffordable loans and the Government for lulling people into believing that there would be no return to boom and bust.”

The OFT's irresponsible lending project will involve wide consultation with business, consumer groups and other stakeholders. One of the key outcomes of the project is expected to be clear guidance on lending behaviours and practices which the OFT considers to be irresponsible.

Ray Watson, director of consumer credit at the OFT, says: ”Credit is an important part of everyday life so it is vitally important that consumers are safeguarded from irresponsible lending and that businesses have clarity about what this constitutes.”

Financial education charity the IFS School of Finance has warned that things will not get any better for consumers whilst so many people lack basic skills in personal financial management.

Phil Hall, head of public affairs at IFS School of Finance, says: "Levels of consumer debt have been at dizzying heights for several years, causing many to face insolvency.

“By equipping the public with the skills, knowledge and confidence to manage their finances effectively, the number of insolvencies would inevitably be reduced."

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