End this cult of greed

TEN years ago this week, greed and risky lending brought Britain’s banking system to its knees.

As Alistair Darling, the chancellor at the time, reminisces about investment banking giant Lehman Brothers collapsing and the desperate moment Royal Bank of Scotland confessed it would run out of cash within hours, it all feels strangely surreal.

But cast an eye over page 43 of this week’s Money Mail, where we expose how banks are routinely doubling — or tripling and even quadrupling — customers’ credit limits without asking, and it’s as though we’ve regressed a decade.

The only reason for handing someone an extra £8,000 or so of credit unprompted is to encourage them to spend more.

Credit card providers hate it when people clear their balance in full each month. If they can entice you to spend just a little bit more than you can afford to pay back that month so you have to pay interest, all the better for them.

It’s a balancing act between wanting you to be slightly overstretched, but not so much that you default entirely.

It’s tempting to think: ‘So what? Just because someone is given access to that much credit doesn’t mean they have to spend it. That’s their choice.’

But people don’t fall into debt only because they are careless with their money. It’s often because something important changes in their life, such as losing a job, falling ill, a relationship break-up or the death of a partner. If they have a large credit limit available, of course they will use it.

So it seems that banks are once again cashing in on people who are desperate. These borrowers need financial help, not a bigger credit card limit with an expensive interest rate.

The good news is that new rules coming in this month mean banks can no longer hike someone’s credit limit if they are in persistent debt. And all new customers must be asked if they want to opt in or out of automatic credit limit increases.

But the rules are confusing and do not go far enough — particularly for existing customers. Would it not be simpler just to stop banks automatically raising people’s credit limits altogether? If someone wants or needs their credit limit raised, they will ask.

One bank executive told me recently that many people don’t want the hassle of having to call. Well, perhaps the wealthy 1 pc of the country are too busy, but they are not the ones who have to worry.

I’m sure the rest of us could spare five minutes.

Bad company

IF ThERE is one company with which I would never again do business, it’s Viagogo. The firm behaves like a pantomime baddie that should be booed whenever it stalks on to the scene.

As we show on page 45, tickets routinely don’t arrive, don’t exist, or have been sold to someone else. It means loyal sports fans are left in the lurch and children who have spent months looking forward to seeing their favourite pop idols end up in tears.

Any business with such casual disregard for its customers deserves to be boycotted. Are there any companies you would never touch with a bargepole? Tell me at moneymail@daily

mail.co.uk, or Northcliffe house, 2 Derry Street, London, W8 5TT.

A cunning trick

LAST week, our letters editor, Tony hazell, lamented how writing to a bank or utility provider no longer guarantees you a response. ‘It’s more likely to be ignored or lost’, he wrote.

The only way to ensure the company gets it is to always opt for ‘signed for’ postage, so you have proof it has been received.

Yet Brian from Kent has another cunning way of checking his letters have arrived safely.

he says: ‘A few years ago, someone gave me this tip: when writing to large companies, enclose a cheque with your letter to the value of, say, £1.

‘When it is opened at the other end, the cheque is automatically sent to the accounts department for processing.

‘You will then find on your next bank statement that it has been cashed, proving that your letter was delivered. Simples.’

If you try out Brian’s idea, let me know how you get on!