Send in fraud squad over fake legal threats, says MP
DETECTIVES were last night urged to launch an investigation i nto banks and utility f i rms that have sent ‘menacing and misl eading’ l etters to customers owing money.
The Daily Mail revealed yesterday that Barclays, Lloyds, Halifax, RBS and HSBC are among organisations that have masqueraded as independent law firms and debt collectors in a bid to get customers to pay up.
John Mann, a Labour member of the Commons Treasury committee, last night said the police should be called in to investigate the ‘contemptible’ practice.
‘If the allegations are correct then this is a form of fraud,’ he said. ‘The regulator needs to deal with it but in my opinion it is also a matter for the fraud squad.
‘It is unacceptable for banks, utilities or anyone else to pose as someone else in order to send menacing letters to their customers. It is completely misleading and obviously designed to intimidate people.’
Mr Mann said bank chiefs are likely to face a grilling by MPs, adding: ‘We need an urgent inquiry on this and I am confident that will happen.’
Andrew Tyrie, Tory chairman of the Commons Treasury committee, last night took the first step towards calling a formal inquiry, saying he would write to the banks to demand an explanation.
‘Customers should know who they are dealing with – it seems they may not have done. I will be writing to the banks for clarification,’ he said.
Payday loan firm Wonga was ordered to pay £2.6million in compensation to 45,000 customers last month, following an investigation by the Financial Conduct Authority. City of London Police are investigating whether Wonga may have breached laws including the Theft Act and the Administration of Justice Act which outlaws the harassment of debtors.
The move came after i t was r evealed t hat Wonga, which charges interest of up to 4,000 per cent on loans, sent letters in the names of two fictitious law firms to pressure customers into settling their debts.
It has now emerged that the practice is widespread among financial institutions, utilities and even some public bodies, such as the Student Loans Company. The use of letters apparently from independent solicitors and debt collectors appears to be designed to frighten customers into thinking the organisation has called in outside help to recoup its money.
In many cases the names used are not known to the Solicitors Regulation Authority (SRA), which regulates the industry.
The watchdog is considering its own investigation into the practice and is expected to issue fresh guidance on the matter following a number of complaints that have given it ‘cause for concern’.
Barclays has been using the name Mercers Debt Collection, while Lloyds, which is part-owned by the taxpayer, has used Sechiari, Clarke and Mitchell Solicitors, the name of its in-house legal department.
Taxpayer- owned RBS and its NatWest arm have been using Green & Co Solicitors, in Telford.
None of these names exists as an independent entity on the SRA register. The legal defence for the practice is that the letters are signed by a solicitor who is regulated by the SRA.
Utilities are also implicated. Scot-
‘Need an urgent inquiry’
tishPower has created the name Sterling Collections for its debt recovery arm, while Anglian Water uses the name Frontier Debt Collections to contact customers with overdue bills.
But critics complain that it amounts to sharp practice. RBS has revealed that, following a review, it will cease using names that ‘could cause confusion’.
All the f i rms i nvolved i nsist that small print on the letters makes it clear that the names used are merely subsidiaries of the main company.