Banks fake legal letters are ‘worse than the payday lenders’

The press is a curious beast. Just a couple of weeks ago there was furore across the board when details of a payday lender’s use of spurious legal letters was released. For this historic debt collection activity, employed from 2008-2010, there was widespread condemnation in print and broadcast media. The company involved has since issued a public apology for this practice and is in the process of compensating its customers to the tune of £2.6 million.

Given the comparative lack of coverage it has received, you might be surprised to learn that many of the UK’s biggest banks have been involved in exactly the same practice. However, unlike Wonga, which was involved in this activity for just two years before ceasing voluntarily, some banks have been intentionally misleading their customers since the 1980s.

Calculated to mislead

Lloyds was the first bank to come under fire after admitting to misleading customers into believing they were receiving debt collection correspondence from a third party. In fact, the law firm in question, Sechiari, Clark & Mitchell, later renamed SCM Solicitors, was part of Lloyd’s in-house team. The spurious legal firm was used because customers had failed to respond to previous letters in the bank’s name.

In a letter to MPs, Mr Horta-Osorio, the bank’s chief executive, admitted the letters had been sent to customers by a law firm which had been formed by solicitors within Lloyds Bank. He also said this practice had been ongoing since the 1980s, and only ceased in March of this year as the bank believed “views on transparency and clarity had changed”.

Until 2011, the bogus law firm SCM solicitors had actually been registered as a law firm with the Solicitors’ Regulation Authority. However, even after the partnership was dissolved, Lloyds Bank kept the name on letterheads when chasing both private and small business customers for payments.

Lloyds are not alone

Unfortunately, Lloyds is not the only bank that employs tactics which pressure customers into repaying their debts. The high street banks Halifax, Barclays, RBS and HSBC are also guilty of sending letters to customers from a supposed third party.

While Barclays bank has been using the name Mercers Debt Collections to chase debts, the Halifax Bank of Scotland has sent misleading letters to its customers under the moniker Blair, Oliver & Scott.

And it’s not only the banks that are guilty of this practice. The Student Loan Company has employed similar tactics when chasing graduates for student loan repayments.

Reaction to the letters

As part of their investigation into the debt collection activities, Mr Horta Osorio was asked by the Treasury Select Committee to disclose details of the practice and to provide a typical letter which would have been sent to customers. The letter employed scare techniques by demanding thousands of pounds were repaid to avoid court proceedings.

In response to the evidence, Andrew Tyrie, Chairman of the Treasury Select Committee, said: “This is very concerning. The sample letter seems calculated to mislead. Lloyds failed to convince us that this was not the case, or provide any satisfactory explanation as to why it issued letters in this form, but at least this practice has been brought to an end.

“Banks have repeatedly assured Parliament that they are raising standards and now have robust procedures in place to bring consumer detriment to an end. But examples of bad practice like this keep surfacing.”

Why is it that such misleading practices, when performed by the banks, receive such limited press coverage? Do you think the banks should compensate their customers for the doubtless distress caused by these letters? We’d love to hear your views on this contentious topic, so please your thoughts in the comments section below.




Why You Should Consider Adopting Minimalist Principles

In the last few years, there has been a lot of interested in the idea of minimalism. The idea that you can do with less in your life is a powerful one. How many of sometimes wish that our homes and our lives were a little less cluttered?

The good news is that you don’t have to reduce your belongings to 100 of your favorite things, and you don’t have to move into a tiny house to adopt a few minimalist principles. Adding a few minimalist principles to your life can have the following benefits:

Help the Environment

By definition, living a minimalist lifestyle has less of an impact on the environment. If you live in a modest home (one that meets your needs, but isn’t ostentatious), you will use less electricity and water. That means a smaller footprint. Some minimalist principles that involve transportation can be good, since the use of public transit, or riding your bike, also reduces environmental issues.

Plus, the less you buy, the less packaging there is to throw away. There are numerous environmental benefits to minimalism. If you are interested in reducing your footprint, even just changing a few of your habits to be more in line with minimalism can help.

Save Money

Many of us like to know how our habits will affect the bottom line. Since one of the principles of minimalism is to learn to be content with less, it means that you won’t be spending as much money on items that you don’t need or maybe even want. Minimalism isn’t about never buying anything; it’s about consciously choosing to buy items that have value to you. This means carefully thinking through a purchase before making it, and ensuring that it is either truly necessary, or that you truly believe it will enhance your life in a meaningful, long-term way.

Limiting your possessions means that you free up your finances to prepare for the future, or to enjoy experiences. On top of that, many of the things that are good for the environment, such as living in a smaller home or changing the way you use transportation, can also save you money over time. You’ll have a fatter wallet, even as your life is a little more minimalist.

More Time for What You Want

Part of minimalism is avoiding being busy just for the sake of being busy. Take a look at your calendar. Are you over-scheduled? Instead of saying yes to everything that comes along, or feeling as though you need to attend every meeting, or have your kids in several activities, consider cutting back.

Figure out which items are most important to you, and which offer the most fulfillment. Those are the activities you should focus on. Really think about the two or three things you find most fulfilling, and then de-schedule the rest of your life. You’ll have more time to enjoy the things you like best, as well as more time to build relationships with friends and family.

Adding a little minimalism to your life makes sense if you are looking to live a little more fully, and if you hope to create a life that you particularly happy with.