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Ethics are “ the rules of conduct recognised in respect to a particular class of human actions or a particular group, culture etc”.

Prior to joining Myvesta UK I spent over 30 years working for major high street creditors.
In my early days banking was very parochial with the focus on providing a community service. The local bank manager acted as judge and jury when dealing with anything to do with lending money. He (in those days it was virtually unheard off to have a lady manager) would personally interview anyone wanting to borrow money and assess the application.

Not only did he look at the borrowers finances, he would look at the person who wanted to borrow the money and he would also take into account the family background. If you had borrowed money and then ran into difficulty in repaying he was the one who wanted to know why but he would take the time to see if things could be put right. Consequently going to see your bank manager was a daunting experience. 

The banks have always made profits but back in those halcyon days the demands of the shareholders was only a minor voice. The banks paid more attention to stability and ensuring it had the right image. There was a code of ethics in place but it was not published, it was just an understanding that the bank served the local community; it took into account local influences and on a national level shareholders did not make demands. To me, as a northern lad, ethics was just a county down south somewhere. 

From the early 1970’s things began to change. First it was the introduction of credit cards, so banks lost their monopoly on lending, the banks and building societies began to fight for each others business and then the banks moved from being happy with having influence in the in the local community to influencing things on a national then an international level. Not surprisingly as the banks became global organisations and shares traded on stock markets worldwide, 24 hours a day, things such as mission statements and codes of ethics began to appear so that anyone, anywhere, could see in a single paragraph what the organisation stood for.

Given that the UK is now dominated by large global credit organisations such as Hong Kong and Shangai Banking Corporation (HSBC), Abbey – who are part of the Santandar group and Bank of America (owners of MBNA) and other creditors such as Barclays and Lloyds TSB are now global companies, then their global status means that they have to adopt an ethic of wanting increased profitability year on year, otherwise they would come under pressure from their larger shareholders. These shareholders are not concerned about the financial problems the man in the street has, he is just a statistic show in the balance sheet bad debt write off. Creditors do like to be known for adopting ethics which help those who fall into financial difficulty. Since 2000 they raised concerns with the Office of Fair Trading (OFT) that some of the debt management companies were taking advantage of those who needed help. As a result they were closely involved with the OFT in drawing up a code of conduct that the Debt Management Companies (DMCs) and creditors should follow. The DMCs embraced them wholeheartedly as it gave them credence for what they do but it is a shame that a large number of creditors still to this day continue to ignore their responsibilities under the code. The same can also be said of they way creditors publicise their eagerness to subscribe to the Banking Code of Conduct, in particular section 14 which covers those in financial difficulties. How can the likes of HSBC and Northern Rock openly say they adhere to the code, yet they deny the right of the debtor to a debt solution such as an IVA. Worse still this is done via a blanket approach so they even look at the individuals circumstances.

It will always be difficult to get the lenders and the borrowers to agree to a set of ethics that they both subscribe to. Whist I have had a go at the creditor in fairness they do have a difficult time with fraud and people deliberately taking credit when they cannot afford it. Also we need to be realistic, those halcyon days will not come back. However what they can do is practice what they preach and follow the codes. Also relax some of the pressure on their staff.  The people that work in the branches, regional offices etc do have their own moral ethics and I am sure they would welcome the opportunity to be allowed to do what they feel happy doing. Serving their customers and finding the best solution for them. Sadly they have strict guidelines and sales targets to achieve otherwise the face disciplinary action and loss of income.

So, after 30 years I now know that “ethics” is not near London. The vast majority of creditors workforce has ethics and they should be allowed the time and the support to use them. What we do not need it such prominence being put on profit before everything else. After all, if a creditor does hold the hand of someone having financial problems and nurses them back to health, they are still a customer and may very well be fit enough to borrow again in the future. So it’s a double whammy…creditor saves a bad debt write off and customer is still a customer.