Banks still use unfair and aggressive tactics, warn MPs
8 March 2010 (updated on 22 April 2010)
Banks in Scotland are continuing to use unfair and aggressive tactics towards some customers who have fallen into debt, concludes a report published today by the Scottish Affairs Committee.
Undesirable practices such as silent phone calls are being used by the very banks being supported by billions of pounds of taxpayers' money and which have a special responsibility to help customers during the economic crisis.
The report examines the impact on Scotland of the current economic crisis, specifically the recapitalisation of its two largest banks: Royal Bank of Scotland and the newly merged Lloyds TSB and Halifax Bank of Scotland.
The Committee recommends that banks should work with Citizens Advice Scotland to ensure that aggressive tactics in use by banks are eliminated. The regulatory authorities should also monitor banks to ensure bad practices cease.
Small and Medium-sized Enterprises are struggling to gain access to affordable finance and the Committee warns that viable businesses are being starved of credit. It says the UK and Scottish governments should ensure Scottish businesses receive the necessary support to weather the current crisis and it awaits the Government’s assessment of how banks have met their lending commitments.
The view of Lord Myners and of the banks that rewarding certain bank executives with enormous bonuses is a necessary evil is disappointing when thousands of rank and file bank employees face redundancy.
The Committee is not convinced that there has been a change in culture within banks as a result of the crisis and is concerned that front-line staff remain under pressure to sell potentially unsuitable products.
The reputation of the financial services sector in Scotland does not appear to have been permanently damaged as a result of the economic crisis and the Committee says Scotland remains an attractive location for global companies to base their operations.
The Chairman of the Committee, Mohammad Sarwar MP, said:
"The effects of the economic crisis in the banking sector in Scotland have been far-reaching and, for too many people, devastating.
"Whilst the Committee recognises efforts being made by the UK and Scottish governments to provide support for individuals and businesses who are struggling to cope, unacceptable practices used by banks must stop.
"We recommend that our successor Committee continues to monitor closely the banking sector in Scotland to ensure that banks are meeting their lending commitments and government actions work to strengthen the sector."