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Scottish Banks Must Improve Policies

'Business As Usual' Is Not Good Enough

Citizens Advice Scotland will today (Wednesday) tell a committee of Scottish MPs that Scotland's banks must establish a greater sense of social responsibility, now they have been bailed out by public money.

Giving evidence to the Scottish Affairs Committee in Westminster, CAS representatives will tell MPs that many of the worst problems people bring to the CAB service exist because of banking policies which have impacted badly on their most vulnerable 'low-income' customers, driving many of them into financial crisis.

Speaking before the meeting, CAS Head of Social Policy Susan McPhee said,

"There's a lot of talk at the moment about the huge shock the banks have suffered and how we must all help them re-gain the position and influence they had before the recession. We in the CAB service see things a bit differently. Because we deal with the real impact the recession has had on people first-hand, and we believe much of that has been made worse by poor banking policies that existed long before the recession. So, as far as we're concerned, a return to 'business as usual' in the banking sector will not be good enough.

"Of course we agree that a strong banking sector is a key part of a vibrant economy, and we want to see the banks recover as economic players. But we also want them to recognise that they have responsibilities to all of their customers, and to society in general. Many of the people who come through the doors of the CAB have been hit financially - not just by the recession but because of harsh banking policies like high overdraft charges. And it is those on lowest incomes who have been hit hardest. Effectively the poor have been subsidising better banking services for the rich. Now the banks have been bailed out by tax-payers money, we say they can't be allowed to go back to the same old policies.

"Because what concerns us is the human cost. Last year Scotland's 83 CABs dealt with over 360,000 debt issues. This represents nearly 1,000 debt issues every day of the year - that's a 14% increase on the previous year. And of those clients who come to us with a debt, almost ninety percent of them are in debt to their bank. Two fifths of these people have told us they have gone without food or fuel in order to pay off their debts. And nine out of ten say their debts have had a negative affect on their health.

"So our message to MPs today is that the banks may be suffering, but the people who have been coming to CABs are suffering even more. Many of them are drowning in debt and others are facing the misery of redundancy, home repossession or falling incomes - as a direct result of banking policies which have failed to take proper account of the economic realities under which many people live.

“The recession's impact on such people will last much longer than the recession itself. We must make sure that, when the smoke clears, Scotland's banks do everything they can to help their most vulnerable customers - and that means they must gain a sense of social responsibility. They cannot simply go back to the policies they were operating before the recession. 'Business As Usual' is not good enough."

The CAS presentation to the committee (attached) details a number of areas in which banking policies need to be reviewed. These are:-

Unfair Overdraft charges

Aggressive behaviour towards debtors

Selling further products to those already in debt

Imposing higher re-payments

Transferring cash from a client's other accounts to pay off debts (known as 'off-setting')

Irresponsible lending - regardless of a customer's ability to re-pay.

Please note this story is embargoed for Wednesday 25 November at 00.01.

CAS spokespersons are available for interview on this story - either in advance or on the day of the presentation. Contact Tony Hutson 0131 550 1010 or 07774 751655.