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McFall attacks “collective madness” of banks’ repossession policies

Treasury select committee chairman John McFall has attacked the “collective madness” of banks’ repossession policies.

The Labour MP for West Dunbartonshire says more banks should follow Royal Bank of Scotland’s lead and wait until a customer is six months in arrears before repossessing a property.

He says: “It is now widely accepted that the banks are acting in a way which might seem rational from the perspective of an individual bank, but is collective madness.

“This applies to the banks’ policy on repossessions. It is not rational for the market to be flooded with repossessed houses.

“The mortgage lenders cannot hope to get back the full value of the mortgage when they do this, given current market conditions.”

He adds: “These repossessions will only further depress the housing market, which ultimately hurts the lenders themselves.

“It helps neither the lenders, nor the borrowers, nor the wider economy. “

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