Banks Irresponsibility in Making Loans

Sam_Bee

Hi all, Not quite sure if this is the right place to put this, but hopefully someone can provide guidance.

I'm in the process of trying to help sort out my stepdad's incredible debts, totalling close to £500,000, when he should be in the process of retiring.

One of the problems, is that today I went through his business & personal loan statements with HSBC. There are 5 (personal & business - which is a one person affair) that total almost £200,000. But they seem to have constantly compounded the problems by issueing loans on top of loans - the most recent a 20 year £100,000 loan when he was 60 - which absolutely blows my mind that they presume he would be able to pay back at the age of 80? (It was a business loan - so despite the bank manager who knew him well authorising the loan and knowing his age, I suppose HSBC could technically say the Business is ageless, thus justifying including an £8,600 early repayment charge!)

As far as I can see their advice and lending has been partly culpable in him getting so badly overstretched, and the more I look at it, insane, and I hope, criminal.

Basically, is there anyway I can show they have lent irresponsibility?
Is there any historic precedent for getting a bank to admit culpability? They are loans paying off loans paying off loans etc.

Thoughts? And thanks for any ideas.

tom188

Surely it cant be entirely the banks fault? Did your stepdad not ask for and agree to the loans.

Sam_Bee

tom188 wrote: »

Surely it cant be entirely the banks fault? Did your stepdad not ask for and agree to the loans.

Of course. I'm not at anyway shifting the blame from my stepdad's incapability to successfully manage his finances, but I find it incomprehensible that he has been allowed to build up debts like this. Everything spiralled out of control, and his response was to bury his head in the sand.

I'm trying to empower him to get his way out of it.

As I said I find it staggering that he got given a £100,000 bank loan lasting 20 years at the age of 60. It reminds me of the misselling of endowment policies.

As this forum is more for people trying to find loans is this perhaps in the wrong forum?

Rafter

No bank would lend this kind of money without some sort of security against the business assets or your stepdad's own home. If they have they are certainly irresponsible and your Dad should consider bankruptcy if he has no reasonable prospect of repaying the loan.

Although there is various age discrimination legislation now, an early repayment charge on a 20 year loan to a 60 year old could be considered unfair, although you may find the charge doesn't apply after 65 (5 years) which would be the normal retirement age.

I think this is the right forum, but it is quite a specialist question. I suggest a trip to citizens advice or a more business orientated government agency (business link?) if that is more appropriate.

Otherwise a solicitor or accountant may be able to advice about the best options and also a plan to repay the debt, manage the business for sale in 5 years and retirement planning if your stepdad has very little put away.

Good luck

R.

margaretclare

Hello, can I just add my fourpence - part of the complaint seems to be the granting of loans at stepdad's age.

We're a pair of wrinklies aged 72 and we're incredibly credit-worthy. Only recently my DH asked for his overdraft facility on his current account to be increased from £800 (he never uses it but thought it would be useful when we go abroad 'just in case'). The bank increased it to the maximum possible, £3,500, without question.

In addition, he has a Barclaycard which he pays off every month, and recently had a letter from Barclays offering him a loan for £8000 to be repaid over 3 years, total £11,000!! His response was 'Do they think we were born yesterday?' and shredded the letter immediately. But my point is, yes they do lend to older people, and I think that now they're not allowed to discriminate on grounds of age. After all, presumably stepdad has been managing his affairs, as far as the bank knew, quite normally, hadn't he? They CANNOT discriminate against him on grounds of age. But of course, whether he showed them the whole picture when he applied for further lending, that is the question.

Margaret

Sam_Bee

Rafter wrote: »

No bank would lend this kind of money without some sort of security against the business assets or your stepdad's own home. If they have they are certainly irresponsible and your Dad should consider bankruptcy if he has no reasonable prospect of repaying the loan.


R.

Thanks Rafter.

Yes, my stepdad has 2 houses. 1 in London that is tied to all his loans, and is worth £275,000. And one in Wales worth £90,000. We're trying see if his debtors (almost exclusively HSBC) will accept settlement from the sale of the London house to avoid him declaring bankruptcy. He's very proud, and want to pay off all his debts, despite some incredibly bad advice. We've spoken to the National Debt Helpline (angels all of them!) who are staggered at the extent of his debt, and the bad advice he's been given. We're trying to pull his head out of the sand...

We want the 2nd house to remain his so he has somewhere to live in his retirement. He has no real business assets, he is a photographer by trade.

Once it's all done and dusted, i'll certainly be looking at the banks charges over the life of his statements, which I estimate to near £70,000.