‘Real Story’ reveals banks’ reckless lending practices |
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Published
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Tue, 10 May 2005 18:55
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In spite of heavy debt clouds enveloping the country, banks have been outrageously found coaxing people to take on more loans and thereby more debt, according to a recent investigation.
Banks practicing unfair lending methods have been declared ‘irresponsible’ as Lloyds’s staff was found persuading customers to undertake such unaffordable amounts as loans that were very difficult for them to repay.
| A documentary report was screened yesterday night on television wherein ill-trained bank staff was selling loans to customers by misrepresenting them with subsidiary rewards and benefits.
According to the BBC1's Real Story, an internal review of Lloyds TSB illustrated that every one out of six loans was being sold by the bank even though the bank had proof of the individual’s weak financial standing and the huge possibility of a default. About 185 loans of more than £15,000 were assessed in the review and it was found that 104 of these loans did not have adequate paperwork and records of the borrower’s finance and earnings. In fact, 31 of the cases had incomplete as well as dubious information.
The auditors made it clear in the review saying that, “issues identified during our review have the potential to expose the bank to significant reputational risk.”
Meanwhile, consumer groups and associations emphasized the need for greater security and assessment to curb the soaring debt levels in the country. Graeme Millar, of the Scottish Consumer Council, spoke about the credit issue and said, "Clearly credit is very easily available at the moment and banks need to be better at scrutinising their lending. Some people do not know how to handle money and giving them even more funds is irresponsible. However, consumers themselves need to act responsibly and ensure they are not asking for money they cannot afford to repay."
BBC’s Real Story has been watching Lloyds TSB’s actions from the past year and even though the bank guaranteed Real Story that it had ceased to offer unaffordable loans to customers since 2003, borrowers as well as the employees of the bank had filed objections regarding the lending practices in the bank, confirming that they were rather unfair. Furthermore, the documentary condemned Lloyds’ costly payment protection plan as well as its persuasive methods of giving credit cards to customers.
Yet, a Lloyd’s spokeswoman came to the defence of the bank saying that the bank issued loans and credit cards only when it was suitable and when the customers were keen enough.
She stated that Lloyds TSB was ‘committed’ to be a ‘responsible’ leader of the industry and “it is clearly not in our interests to lend money to people who cannot afford to pay us back. We have stringent rules and controls in place. If a scenario arises whereby an individual operates outside those rules, as has been suggested, we take it extremely seriously and conduct a thorough investigation. We strive for very high standards in this area and are constantly monitoring our practices."
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