Banks Adopting Belligerent Tactics

Posted 2007-12-17

Many people are complaining that banks are using belligerent tactics to prey on those in debt, according to the Citizens Advice Bureau (CAB).

 

Borrowers who entered into an agreed debt repayment plan through a debt counseling charity are being urged to take out expensive loans to ease their debt load.  The BBC verified that banks have been contacting customers again and again to talk them into loans.  Debt advice charities counsel against this move.

 

Although he said “no” to his bank’s offer of a “managed loan,” one HSBC customer reported that the bank continued to telephone him in an effort to change his mind.  The managed loan draws interest of 13 percent, two times the interest he is currently paying.

 

The bank has sent many letters to the customer advising him that they can help with his financial difficulties, a claim he does not believe.  HSBC has agreed to a monthly payment amount, but the bank will lend the money only as a managed loan.

 

The HSBC insists that it is a responsible lender, and offers managed loans to customers only when all other avenues have been exhausted. 

 

The CAB reports that many people with considerable debt have attempted to set up a repayment schedule but their bank has demanded more than they can pay.  Some bank customers have asked their bank to work with a debt advice agency, yet the bank continues to call and send menacing letters.

 

Many people who turn to the CAB have attempted to set up arranged payments with their banks.  The bank has seemingly disregarded the customer’s circumstances and asked for payments higher than the customer can afford.

 

The British Bankers’ Association insists that banks will gladly work with debt advice charities.  According to the CAB, customers continue to receive calls and letters from their banks even after arranging to work with them.

 

Banks simply negotiate with intermediaries like money advice trusts, according to a spokesperson for the BBA. 

The average Briton carries nearly twice the debt burden today as in 2000, according to PriceWaterhouseCoopers, the international accountancy firm.  A person who with debt of £17,000 seven years ago is likely to owe £30,000 today.

 

Rising housing prices and high monthly mortgage payments account for the increase in debt, and experts warn that borrowers could see trouble in the future if the global credit crunch continues.

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