Banks fuelling repossessions

12.00.00am GMT Mon 22nd Jan 2007

Vincent Cable (Lib Dem MP for Twickenham) has challenged the leading clearing banks, through the British Bankers Association, to justify or change such practices as refusing mortgage borrowers in arrears access to their lower rate facilities, making repossession more likely, and adding large charges for every telephone or written reminder that there are arrears.

He has cited in particular the case of Hampton Hill resident, Rachel Parkins, a single mother who after being abandoned by her partner started to accumulate serious arrears with Halifax Bank of Scotland since her housing and other benefits did not cover the mortgage. The Bank refused her request to switch to a low interest facility, as a matter of policy, because she was in arrears and instituted charges of £35 per letter for reminders that she was in arrears. It is now filing for repossession.

Vincent Cable said:

"With rising interest rates, and worrying levels of personal debt in relation to income, any family facing illness, redundancy or separation can find themselves in arrears very quickly. If the banks are going to take these family disasters as an excuse to squeeze a bit more out of their borrowers and push them into repossession, rather than help cushion the blow, there will be an even more dramatic rise in repossessions than we have already seen in the last year.

"I am pressing the banks to develop a 'code of conduct' to cover such eventualities and I have raised with the Chancellor in Parliament the need for him to call in the banks to discuss their practices."