26 June 2011
The patience of António Horta-Osório, the Portuguese-born boss of Lloyds Banking Group, appears to be wearing thin. According to a comment piece in the Sunday Telegraph, the former Goldman Sachs and Santander banker has pleaded with executives from Lloyds and the former HBOS to stop hiding the truth from him.
The paper’s business editor Kamal Ahmed wrote: “Those close to him reveal that there has been a simple message to executives during the planning of his first major set-piece as chief executive — “bring out your dead”. Mr Horta-Osório has asked everyone to “look under the drain covers” and give him an honest appraisal of where the bodies lie. If they don’t, there will be a “sense of humour failure” if they come knocking on his door in 12 months’ time.
Rather than write detail all the areas where Horta-Osório might care to shine a light in the event that his call gets ignored (and there are plenty) I wanted to focus on just one. This is something of which I only became aware a few weeks ago, and while less egregious than some of the examples that will be familiar to readers of this blog, it does illustrate the appalling double standards of this bank.
Anita Williamson, who has turned to blogging after being hounded for two and half years by the Bank of Scotland over a disputed £217,000 debt, recently summarized what she’s trying to achieve.
Williamson claims that the debt which Bank of Scotland, a bank which has been owned by Lloyds since January 2009, only exists because the bank forced a sale of the Williamsons’ home in October 2008. The bank pushed through the fire-sale of the property despite its knowledge that the Williamsons had secured a tenant for three years — and that the rental income would have covered the interest payments.
But the bank, which had just been bailed out by the government of Gordon Brown, refused to listen to the proposal and instead took the Williamsons to court in November 2008. It got an order for repossession in January 2009. The 16th century tithe barn that they had lovingly restored over a 10-year period was sold at a significant loss, creating a massive shortfall.
At the time of the sale, the Williamsons were already £27,000 in arrears, a situation Mrs Williamson was unaware of at the time. Her husband had been hiding their true financial problems from her (he was suffering from severe depression at the time, following a couple of bereavements and a failing property business). Yet, even though it knew Mrs Williamson was oblivious to the couple’s true financial position, the Bank of Scotland made no attempt to contact her at the time.
Mrs Williamson has spent two and a half years writing and explaining to the Bank of Scotland that the couple, who have three young children, don’t have the funds to settle the shortfall, either now or in the future (her husband had built up other debts). In her Life After Debt blog, Anita Williamson wrote: “In spite of this the Bank of Scotland have continued to pursue us stating that they never write off debts of this sort and that we must make a payment arrangement. The Bank of Scotland are fully aware that we have three young children and my husband now earns only £15,000 per year. They have heard this not only from me but also repeatedly from the Citizens Advice Bureau who have been helping us deal with our creditors.”
The Bank of Scotland — which has continued in pretty much the same vein since it was acquired by Lloyds Banking Group in January 2009 — has behaved abominably in this instance which, given my knowledge of its behaviour elsewhere in its business, does not surprise me. What I find distasteful is the bank’s double standards.
“Friendly” property developers and tycoons who borrowed billions from the bank — including West Coast Capital’s Sir Tom Hunter, Murray International Holdings’s Sir David Murray, Gladedale’s Remo Dipre and Tulloch Homes’s David Sutherland — have been exempted from repaying millions of pounds to the bank. This was achieved through deals the bank characterises as “debt-for-equity swaps” but which, in reality, were more akin to “debt forgiveness” since the equity that the bank took in exchange for its debt was as good as worthless. The bank has indicated it will show similar debt forgiveness to buy-to-let borrowers in Ireland.
Although their outstanding debt is a tiny fraction of the sums owed by these property entrepreneurs, the Williamsons have been hounded by HBOS and Lloyds Banking Group, which are using means and foul in the hope of clawing back their alleged debt. The solicitors being used by Bank of Scotland are Cardiff-based debt recovery specialists Merrils Ede. On the “commercial recovery” page of the firm’s website it says: “We are well aware of the damaging effect that “can’t payers” or “won’t payers” have on cash flow, turnover and most importantly profit. Our proven approach to collections delivers practical solutions and speedy results for our clients. We provide a service for the collection of all categories of delinquent debts.”
In her Father’s Day blog published on June 20, 2011, Williamson described how she feels about this firm: “I have come to the conclusion that their unfaltering objective must be to milk their lucrative cash cow, the Bank of Scotland, for as much as they can get away with. It would certainly logically explain their relentlessness in pursuit of us. No doubt mine and my family’s well being are merely collateral damage in the overall scheme to line their pockets.”
- Public exposure of Merrils Ede and the Bank of Scotland penchant for their inability to distinguish between ‘can’t pay’ and ‘won’t pay’.
- Public exposure of Bank of Scotland’s unashamed abdication of its responsibilities to keep me informed on our mortgage in spite of my wifely status (sexism, indeed misogyny, is a common trait with this bank where joint mortgages are concerned. The bank has stated that it feels no obligation to discuss arrears on joint borrowings with wives if they have already discussed the matter with the husband).
- Public exposure of Lloyds Banking Group for joining ranks with HBOS and condoning this behaviour by flitting between the role of persecutor and administrative incompetent for three years.
- Escalating a problem to ten times its original size (see her International Woman’s Day)
- Unnecessarily repossessing our home when an alternative could have saved it and our future equity.
- Blatantly flaunting discriminatory practises against married women.
- Negligently omitting to advise me to take independent legal advice separately from my husband at outset.
- Causing three years of relentless pain and suffering at the hands of their henchmen while fully aware of our vulnerability and our financial plight.
Update 5.30pm Sunday June 26th 2011
Tony Horan on twitter said “Good blog, but people need to live within their means & 27k shortfall – why should it be written off?”. He later tweeted: “I completely agree re: fav treatment of tycoons, but everyone has to be liable for debts (take responsibility) …. the couple had debts elsewhere, why would the bank wait & hope that they would recoup any money in the future?” I accept that people need to be responsible for their own actions and should clearly avoid taking on more debt than they can realistically afford to repay. However there are mitigating circumstances in the Williamsons’ case and there is also such a thing as odious debt.
- Naked Capitalism blog The £1bn-plus HBOS Fraud Investigation That Lloyds Keeps Trying to Brush Under the Carpet
- Further information on alleged frauds at HBOS which Lloyds Banking Group is either striving to to cover up or remains in denial about.