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Courts Decision 'Lets Banks Off The Hook'

Citizens Advice Scotland (CAS) have said today's Supreme Court decision on Bank charges has let banks off the hook, and will leave thousands of Scots stranded in financial despair.

CAS Chief Executive Ms Kaliani Lyle said today,

"This decision is extremely disappointing. We completely supported the Office of Fair Trading in their efforts trying to tackle this issue, and we will continue to back them - because that is in the best interests of our clients.

"Throughout this year we have been revealing the huge financial problems that are being brought to Scotland's 83 CABs by people across the country. The levels of debt and financial problems are really overwhelming. Experienced CAB staff all over Scotland are telling us they have never seen these problems on such a scale."

The key figures revealed by CAS in their recent survey of CAB debt clients are:

  • There has been a 50% increase in debt levels in the last five years – the average debt now just over £20,000.
  • For every £1 of income they have, our clients owe on average £28 of debt!!!
  • It's even worse for those clients on low incomes (i.e. under £400 per month). They owed £52 for every £1 of monthly income!
  • On average, people who are in debt have not just one debt. but 6 debts each.
  • 9 out of 10 of our debt clients owed money to a bank (and just under half of those had an overdraft).
  • 2 out of 5 said they had gone without food or fuel to repay their debts
  • Half have incomes of less than £800 per month and a quarter have less than £400 per month.
  • Half have no income other than pensions or benefits.

Kaliani Lyle continued:

"This is about people - real people, living in every street, every town, every community in Scotland. The reality of life for so many Scots in this recession is that they are really struggling just to make ends meet. The challenge of simply paying the weekly bills is a real strain, and any unexpected expense or sudden drop in income can really break their budget.

"In these situations, banks should actually be helping people to control their money and make their financial arrangements easier to manage. But instead, excessive charges have forced many people into debt - which quickly becomes unmanageable.

"We have recently been highlighting cases of CAB clients who have found themselves in hundreds of pounds of debt just because of going into overdraft by a few pence. And these are not unusual cases - they are fairly common. All sorts of people are affected, but particularly vulnerable groups include pensioners, lone parents, young people and the sick and disabled. It is those on low incomes who are hit hardest, and they are effectively subsidising better banking policies for the rich.

"So we hope this decision is not the final act in this story, because too many people in Scotland are drowning in debt. They were expecting to be thrown a lifeline today. Instead the banks have been let off the hook. This is a decision which will leave many Scots in financial despair."

CAS spokespersons are giving evidence today on the banking sector to the Scottish Affairs. The session begins at 3.30pm in Committee Rm 16, Palace of Westminster. The presentation they are giving are available on the following link: Scottish Affairs Committee Memo.

For more information, please contact Tony Hutson on 0131 550 1010.


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