Ethics Newsline®

LONDON
British bank Lloyds TSB was accused last week of pushing massive loans onto consumers ill-qualified to repay the large sums, violating industry standards and prompting internal and regulatory investigations.

The charges were leveled by the BBC, which obtained an internal Lloyds review of 185 loans with a value of more than $27,000 each.

Lloyds’ investigation concluded that more than one-half of the loans were granted without sufficient background checks, and more than one-sixth offered despite information indicating “that affordability was doubtful.”

“It is our opinion that some of the issues identified during our review have the potential to expose the bank to significant reputational risk,” the internal audit concluded.

The BBC, which has been monitoring Lloyds’ lending practices since last year, said its investigation was prompted by complaints from both consumers and Lloyds employees, reported the Press Association.

Following the BBC report, the British Banking Code Standards Board (BCSB), which oversees voluntary guidelines and best practices, said it would investigate and take disciplinary action if needed.

BCSB chief executive Seymour Fortescue said Lloyds, which has pledged to be a “responsible lender,” deserved “some credit for commissioning these internal reports to see what was going on.”

In addition, Graeme Miller of the Scottish Consumer Council said that while lenders often are aggressive, “consumers themselves need to act responsibly and ensure they are not asking for money they cannot afford to repay,” noted the Scotsman.

In the wake of last week’s report, Lloyds reportedly has agreed to forgive the debt of David and Wendy Dickerson, whose plight helped put the spotlight on abusive lending practices, reported the Western Mail.

Even though David Dickerson is unwell and on benefits and Wendy Dickerson earns less than $10,000 a year, the couple was encouraged by Lloyds to borrow $185,000 over 12 months. Pressure to repay the multiple loans pushed Wendy Dickerson to thoughts of suicide.