In the latest BFSO Bulletin (number 53, pdf) the Banking and Financial Services Ombudsman gives guidance for banks and other members of the BFSO dispute resolution scheme in dealing with customers in financial difficulty (where maladministration or another claim which might affect legal liability of the lender does not arise).
The Bulletin identifies systemic issues as well as providing case studies.
The Bulletin concludes that banks need to be flexible in their interpretation of their obligations under the Code of Banking Practice (which is wider than the Consumer Credit Code).
The Ombudsman :
- suggests that banks establish dedicated teams to deal with such problems;
- expects that the customer will complete a statement of financial position and that the bank will consider the information and respond to the customer with reasons explaining its response to the request;
- suggests that moratoriums or arrangements which do not repay interest may not be appropriate for either party where there is no prospect for a change in the customer’s financial position;
- concludes that continuing debt collection activities are not appropriate where either a clause 25.2 or a section 66 request is under consideration. Listings should not be used as an unfair negotiating tool or punitively for customers in financial difficulty.
