Banks, ballsed it up again
Aug. 31st, 2006 08:03 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
peterbirksIt appears that the banks are upset at the new breed of debt management companies for their aggressive marketing of individual voluntary arrangement services. They blame these debt management companies for the large rise in bad debt provisions.
The incompetence, as usual lies at the door of the banks. The morons in charge at these institutions assume that customers are passive people who want to do nothing more than pay over half their salary in interest to the banks. They also assume that the rest of the economy will not change. Where there is a need for people to cope with excessive debt (encouraged by the banks) then companies will spring up to service that need. Blaming the companies that provide that service is a neat way to avoid any blame falling upon yourself but, as with their farcical "rate tarts" campaign (remember that? -- attacking the consumer for seeking the best price on a product. Brilliant) the only people who end up looking like fools are the banks.
Of course, these debt management companies do themselves no favours -- the fees that they charge to people who are often quite desperate are frequently just this side of usury. And the people who have got themselves into debt don't deserve much sympathy either. But it's a bit unfair to heap the entire blame on rather stupid people who have been bombarded their entire lives with the twin messages of SPEND!!!! and BORROW!!! The banks want to get the interest off these idiots, while the debt management companies want to take the cash in fees, thus depriving the banks of the money. Meanwhile the heavily indebted consumer, somewhat puzzled that all the money he or she spent with that nice piece of plastic actually has to be paid back looks for the deal that gives the most damage limitation.
Each is acting in correct self-interest, but for god's sake, let's not have another orgy of the banks/lenders trying to take the moral high ground.
The incompetence, as usual lies at the door of the banks. The morons in charge at these institutions assume that customers are passive people who want to do nothing more than pay over half their salary in interest to the banks. They also assume that the rest of the economy will not change. Where there is a need for people to cope with excessive debt (encouraged by the banks) then companies will spring up to service that need. Blaming the companies that provide that service is a neat way to avoid any blame falling upon yourself but, as with their farcical "rate tarts" campaign (remember that? -- attacking the consumer for seeking the best price on a product. Brilliant) the only people who end up looking like fools are the banks.
Of course, these debt management companies do themselves no favours -- the fees that they charge to people who are often quite desperate are frequently just this side of usury. And the people who have got themselves into debt don't deserve much sympathy either. But it's a bit unfair to heap the entire blame on rather stupid people who have been bombarded their entire lives with the twin messages of SPEND!!!! and BORROW!!! The banks want to get the interest off these idiots, while the debt management companies want to take the cash in fees, thus depriving the banks of the money. Meanwhile the heavily indebted consumer, somewhat puzzled that all the money he or she spent with that nice piece of plastic actually has to be paid back looks for the deal that gives the most damage limitation.
Each is acting in correct self-interest, but for god's sake, let's not have another orgy of the banks/lenders trying to take the moral high ground.
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Bankruptcy
Date: 2006-08-31 09:13 am (UTC)Bankruptcy is now such an easy route that I have to construct weird circs that mean it's not a better option than an IVA. A client of ours went bankrupt on Tuesday (debts credit cards £1K, Inland Revenue £45K, other bits £5K). By Thursday he had got another bank account opened and is delighted to find that the favourable tax treament of bankrupts (he won't pay PAYE tax until next April) means he's better off already.
The sheer volume of bankrupts means they have to be treated humanely. It was fine to treat bankrupts like lepers when there were only a few but these days, it's just an interesting scar to show off. Plus the volume means that the Insolvency Service hasn't the manpower to follow up on the post-bankruptcy regime efficiently enough.
So the bank-whingeing will just create more bankrupts and more money written off. They should just offer the IVA services in-house and try and make money out of it themselves. Maybe then they'd have to be a bit more sensible about plugging credit to those who can't cope with it.