Another interesting consideration ahead of the impending accounting standard IFRS 9, is the effect this could have on valuation and pricing. Under IAS39 you only consider lifetime losses when the impairment event has already happened so you only hold a small amount of provision for your entire up to date book.
When you have to hold lifetime losses for a significant portion of this up to date book under IFRS 9, organisations may find that some of these portfolios are no longer profitable, despite being regular payers.
This situation is also exacerbated by the interplay between capital and impairment. Without going into too much detail, as a general rule, more capital resources will be required under IFRS 9, which could lead to an increase in the cost of capital overall and certainly per pound lent.