In the Media

More banks admit creating 'law firms' to send debt letters

PUBLISHED September 5, 2014

Two major banks have admitted sending debt collection letters to customers purporting to be from independent firms of solicitors.

In replies to the House of Commons Treasury Select Committee, HSBC and RBS both acknowledged that they had previously adopted this practice for debt recovery.

Two further banks, Barclays and Santander, said they had previously undertaken in-house debt collection activity under separate brands.

The practice of sending letters purportedly from a firm of solicitors came to light earlier this year when payday lender Wonga agreed to pay compensation to recipients.

Subsequently, it emerged that Lloysds had sent letters to in-debt customers using the name 'SCM Solicitors'.

Andrew Tyrie MP, chairman of the Treasury Committee, said: 'These sample letters seem to have been designed to pull the wool over consumers' eyes. Many customers will have been understandably misled. What is more, from these responses it seems that this practice was widespread. Banks say that they have now stopped sending such correspondence but it should never have happened in the first place.'

The issue prompted the Solicitors Regulation Authority to warn in-house solicitors not to mislead third parties and take unfair advantage of customers' lack of legal knowledge.


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