Page last updated at 16:33 GMT, Monday, 8 March 2010

Banks accused of unfair tactics towards clients in debt

Banks have been told to stop aggressive tactics towards customers

Banks are continuing to aggressively target customers who have fallen into debt, according to a report by a group of Scottish MPs.

The Scottish Affairs committee has called for an end to "undesirable practices" such as automated calls.

The report says banks have a special obligation to behave fairly, and to help customers during the recession.

But it said it was concerned that frontline staff were under pressure to sell potentially unsuitable products.

The committee recommended that banks should work with Citizens Advice Scotland to ensure that aggressive tactics are eliminated.

Unacceptable practices used by banks must stop
Mohammed Sarwar MP
Scottish Affairs Committee

On the issue of pay, the committee expressed disappointment that banks considered it a "necessary evil" to reward certain bank executives with enormous bonuses when thousands of rank and file employees faced redundancy.

The chairman of the committee, Mohammed Sarwar MP, said: "Whilst the committee recognises efforts being made by the UK and Scottish governments to provide support for individuals and businesses who are struggling to cope, unacceptable practices used by banks must stop."

'Credit starved'

The committee warned that small and medium-sized enterprises were struggling to gain access to affordable finance and the committee claimed that viable businesses were being starved of credit.

It said the UK and Scottish governments should ensure businesses received the necessary support to weather the current crisis and it awaits the government's assessment of how banks have met their lending commitments.

The Federation of Small Businesses in Scotland praised the committee for highlighting the importance of transparency in small business lending decisions.

Spokesman Colin Borland said: "It is through greater transparency and better communication that the trust between the big high street banks and their small business customers will be restored.

"Further, the committee highlights that there is still some distance between how high street banks say they are behaving and the real-life experiences of small businesses out there in the real economy.

"That is why we need to get a swift, accurate picture of what's really happening - and why the FSB in Scotland continues to argue for the creation of a Financial Intermediary Service to get to the heart of the matter."

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