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A recent statement from a claimed Northern Rock debt management department employee raises new evidence and concerns about the banking policies of Northern Rock and their flagrant and abusive disregard for consumers with repayment problems.

In the past I have written about the blanket IVA refusals by Northern Rock and how a solicitor is pursuing those cases. How the refusal by Northern Rock to treat their debtors either sympathetically, fairly or individually is a violation of the Banking Code and how under Office of Fair Trading guidelines that creditors are not permitted to contact the consumer once they have been notified that they are being represented by a third-party, in this case, an Insolvency Practitioner.

Chris, the alleged employee stated the following in response to a recent article:

“As an employee in the Debt Management department of Northern Rock, I can assure you that the last thing we wish to do is force customers into bankruptcy.

We reject IVA’s out of hand, [VIOLATION] but this is to protect our interest. And why shouldn’t we? We lend someone money - they agree to pay x amount per month. Simple as. Now if a customer contacts us to advise they are having some difficulty repaying their loan/mortgage then we will do what we can to help them.

However, the majority of times the first we hear of any difficulty is from an Insolvency Practitioner.

We still try to contact the customer [VIOLATION] to come to an agreement to repay their loan - even offering lower than average interest rates.”

(Yes, I added the [VIOLATION] marks to show you the important sections.)

And Therein Lies The Problem

If a Northern Rock debt management employee feels this strongly about a position which is clearly wrong then certainly this reflects either a purposeful disregard for compliance with the British Bankers Association and the Office of Fair Trading or this is a reflection of complete disregard for the rules and a failure in staff training.

The issue here is that under specific, clear and written directives by the Banking Code, to which Northern Rock subscribes to honor and according to the OFT Debt Collection Guidelines that Northern Rock must honor they simply are not honoring either.

These issues have left me wondering about the greater issues of banking ethics and business ethics and I’m eager to have an open, frank and honest dialog about these issues at the site I created, The Ethical Banker.

There is no doubt that Northern Rock appears to be in clear violation of the policies, codes and guidelines mentioned above but isn’t the mark of a good bank not if they make mistakes, but how they remedy them?  In this case it appears that more than a memo is needed to help change the culture inside the banks collection department to reflect good business ethics and not good self-serving profit making ethics.

Shouldn’t banks be offering a product with fairness rather than a GOTCHA product where once you sign on the line you are held to absolutes? How can a bank hold consumers to an absolute in an non-absolute world? Does signing on the line for a financial product move the banks interests ahead of all others in the case of a situational life change?

If a bank determines that a consumer is a good risk as long as he has his current level of employment but loses that employment through no fault of his own has the agreement been modified and shouldn’t consideration be granted to incorporate the debtors new circumstances? And before you start flaming me on this, aren’t these just the risks that are inherent in extending forward promises or repayment in an imperfect and uncertain world?

Northern Rock Ethical Considerations

I’m wondering if we as a society consider it to be ethical for a bank to extend sub-prime or relaxed loans to consumers but not to extend the same degree of laxness or flexibility on the back end if a consumer gets into financial troubles or is that entrapment?

If a bank knows they are not in compliance with a code or regulation but continues to operate in non-compliance surely that must be against the banks ethics or is it if compliance would impact profitability?

Are banking ethics based on profit or the fair treatment of banking customers in good times and in bad?