Banks Using Assertive Approach

Posted 2007-12-17

The CAB or  Citizens Advice Bureau has stated that it has received a number of complaints with regards to the assertive approach that many banks are using and are targeting those in debt.

The BBC has found out that many customers, in order to clear their debts are under pressure to take out rather expensive loans. These customers have given their approval to a debt repayment plan with a debt advice charity.

Acting against the advice of debt charities, many banks are continuously calling customers to convince them to take costly loans.

An HSBC customer reported that although he did not accept a ‘managed loan’ that the bank offered him, they continued to call him to try and convince him to change his mind. Moreover this so called managed loan has an interest rate of 13 percent, amounting to twice the amount that he currently paid.

The HSBC further stated that he received a number of letters from the bank stating that they wanted to help out people who were facing a financial crisis whereas it was quite obvious that it wasn’t the case. HSBC agreed to the amount that he could repay each month, however this repayment would be accepted only after he would sign up for a managed loan.

HSBC in it’s defence stated that being a responsible lender, they (HSBC) only offered managed loans when there seemed to be no other lending options left.

Furthermore the CAB stated that it had taken note of many other situations where people in debt agreed to make payments where the banks had asked for much more than what these people could actually afford. In fact, in some cases customers had specifically asked the banks to deal with a debt advice charity but they continued to receive phone calls as well as aggressive letters.

A CAB spokesperson confirmed that they were aware of many cases where people have approached banks with regards to arranged payments and the banks have just ignored these requests and on the contrary asked for more than what these people could afford.

On the other hand, the British Bankers’ Association (BBA), the bank’s organisation stated that they were more than willing to work with debt advice charities. However the CAB reported that they found that customers continue to receive assertive letters and phone calls from their lenders.

A BBA spokesperson stated that it was basically negotiations that they carried out with money advice trusts.

Compared to 2000 when the average Briton owed just 17,000 pounds, this amount has been increased to 33,000 pounds, reported PricewaterhouseCoopers, international accountancy firm. Which means families are paying nearly twice as much than they did 7 years back. Increasing real estate prices combined with large monthly mortgage payments have been a main cause of this increase. Tough times are predicted for the future by experts because of the global credit squeeze.

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