Treasury select committee chair Andrew Tyrie has attacked Lloyds Banking Group for issuing debt collection letters that are “calculated to mislead”.
Lloyds is the latest in string of institutions to face criticism for issuing debt collection letters apparently from legal firms. Last month, Wonga was ordered to pay £2.6m in compensation for “unfair and misleading” debt collection practices, including sending letters from non-existent law firms.
In Lloyds’ case the letters were sent from a law firm which had been set up by the firm’s internal litigation team, but appeared to come from an independent company.
Tyrie says: “This is very concerning. The sample letter seem calculated to mislead. Lloyds failed to convince us that this was not the case, or to provide any satisfactory explanation as to why it issued letters in this form, but at least this practice has been brought to an end.
“Banks have repeatedly assured Parliament that they are raising standards and now have robust procedures in place to bring consumer detriment to an end. But examples of bad practice like this keep on surfacing.”
Lloyds chief executive Antonio Horta-Osorio has written to the committee to confirm the bank issued letters aimed at collecting debt under the name Sechiari Clark & Mitchell since the late 1980s.
The letter says: “In the 1980s, solicitors within Lloyds Bank formed a law firm, Sechiari Clark &Mitchell to conduct debt collection on behalf of the bank, changing its name to SCM Solicitors in 2009.
“Until 2011, it was registered as a law firm with the Solicitors’ Regulation Authority. In July 2011 the partnership was resolved. The name SCM Solicitors was kept and its status as part of the in-house litigation team was disclosed on the correspondence.”