Banks are risking the financial well-being of customers by allowing 70% of successful applicants to take out loans without first checking for proof of income, it has been claimed.
Price comparison website uSwitch.com said it had uncovered overwhelming evidence of "systematic failures" in the way in which loans are issued.
It found that in the last 12 months almost eight out of ten borrowers were issued loans without the lender carrying out any checks to verify that they could afford to repay the debt.
Furthermore, almost 1.6 million loans had been approved over that period without properly verifying people's incomes.
UK lending on unsecured loans over the last six months amounted to £17.1 billion, according to recent statistics.
But £11.9bn of this was issued ignoring basic checks on customers' income and outgoings, it was claimed.
This is despite changes to the banking code in April aimed at giving greater protection to consumers and strengthening existing lending practices.
Evidence of bad practice allegedly uncovered by uSwitch includes lenders granting loans in excess of annual incomes and granting applications from people without regular work.
Lax procedure has led to people lying about their income on loan applications, with some adding up to 30% to their actual salary, it was alleged.
Many of these people, uSwitch warned, are likely to be from the most vulnerable groups - those in low incomes and the unemployed.
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