Shaming of our bully banks: We DID intimidate customers with fake debt collection letters, admit bosses
HSBC, Barclays, Santander and RBS/Natwest all admit sending the
letters (sample above), which the government's Treasury committee said
leads banks to be 'pulling the wool over customers' eyes'. Labour MP
John Mann added the practice was 'obviously designed to intimidate
people'. The release of a series of letters confirming the policy
follows campaign highlighting the scandal by the Daily Mail, which
erupted when Wonga was ordered to pay £2.6million in compensation to
45,000 customers who it sent misleading debt demands. (Main photo: file
image)Shaming of our bully banks: We DID intimidate customers with fake debt collection letters, admit bosses
- HSBC, Barclays, Santander and RBS/Natwest all admit using the trick
- Treasury committee said banks are 'pulling the wool over customers' eyes'
- Labour MP John Mann: Practice 'obviously designed to intimidate people'
- Release follows campaign highlighting the scandal by the Daily Mail
The big banks sent hundreds of thousands of letters from fake debt collection firms to ‘intimidate’ customers.
HSBC,
Barclays, Santander and RBS/Natwest admit using the trick on families
deep in the red. The letters misleadingly suggest that law firms and
outside debt collectors are being called in.
The
admissions, which follow a campaign by the Daily Mail to highlight the
scandal, came in a series of letters released last night by MPs. In one
of them, the chief executive of Barclays confessed the bank had used a
number of ‘debt collection brands’.
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Shameful: Andrew Tyrie, chairman of
the Treasury committee which published the letters, said: 'Many
customers will have been understandably misled. It seems that this
practice was widespread'
Appearing
to acknowledge intimidation, Antony Jenkins said the letters were meant
to indicate to customers ‘an escalation in the seriousness of the
situation’.
RBS
chief Ross McEwan said the bogus letters ‘reflected what had become a
common industry practice in a sector that had come to put its own
interests above those of its customers’.
Andrew
Tyrie, Tory chairman of the Treasury committee, which published the
letters, said: ‘These letters seem to have been designed to pull the
wool over consumers’ eyes.
‘Many customers will have been understandably misled.
Intimidating: How the letters appear to customers
‘What
is more, from these responses it seems that this practice was
widespread. Banks say that they have now stopped sending such
correspondence but it should never have happened in the first place.’
The
Mail revealed the extent of the problem in July, which prompted
condemnation from Citizens Advice as well as investigations by MPs and
the Solicitors Regulatory Authority.
The
Treasury Committee asked the banks to provide samples of the letters
they sent out to customers and questioned them as to how long they had
been using these debt collection methods.
Yesterday,
the committee published an exchange of letters with RBS/NatWest, HSBC,
Barclays and Santander, which make clear they have all been guilty of
long-running subterfuge.
John
Mann, a Labour member of the Treasury committee, said an ‘urgent
inquiry’ was now needed into a practice he said was ‘obviously designed
to intimidate people’.
Barclays,
HSBC, RBS and Santander all admitted using the practice for many years,
but said they had now stopped following a public outcry.
Student
Loans Company boss Christian Brodie apologised and offered to resign in
July this year after similar practices were uncovered at the
organisation, which handles tens of billions of pounds in student loans.
But none of the banks apologised in their letters to MPs.
Mr
McEwan came closest, saying: ‘I totally accept that we must always make
it clear to our customers who they are communicating with.
‘I
will not defend the continuation of a practice that does not meet the
standards (I set for the business). The customer interest test should be
applied to every single thing we do as a business. This activity failed
that test.’
Overwhelmed: The letters will likely have been sent to some of the banks' worst-off customers in heavy debt
Mr
McEwan said RBS had established an in-house solicitor, Green & Co,
to help it collect debts. It also used the brands Triton Credit
Services, Unidebt and Tamarisk Debt Management to fool customers into
thinking they were dealing with outside agencies.
Last year alone, Triton issued 423,000 letters to 119,000 customers, while Green & Co sent out a further 29,000 letters.
Mr
Jenkins claimed the use of other brands helped alert customers who had
stopped opening letters from the bank that they were in trouble. He said
text messages were now used.
Campaign: A Daily Mail headline on July 4 this year
HSBC
chief executive Alan Keir said it had used four separate in-house
brands to suggest it had called in outside help in collecting debts.
Mr
Keir said the practice dated back to 1985 and stopped in July this year
– after it was exposed by the Press. Thousands of HSBC customers
struggling with their debts received letters from DG Solicitors,
Metropolitan Collection Services, Central Debt Recovery Unit and Payment
Services Bureau.
In each case, the letter was actually from a part of HSBC, although this was made clear only in the small print.
Santander
also admitted using a ‘separately branded identity’ when collecting
debts, but insisted this had never involved posing as a legal firm.
The banks insisted the true ownership of the fake debt collection and legal agencies was made clear in the small print.
Last month the payday loan firm Wonga was ordered to pay £2.6million in compensation to 45,000 customers over the practice.
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