I am getting increasingly annoyed by the prejudice against people who hold or have completed IVAs and by prejudice I mean refusing a financial product or service, setting employment criteria and making it difficult to rent without sound business resoning.
The banks are not so far from the landladies of yesteryear putting up signs for “no Irish, no dogs, no blacks” (obviously these people didn’t contribute to the cause of their prejudice so we aren’t quite in the same boat, but it’s not a world away).
It irks me that banks are becoming so intolerant of IVAs that people are being forced into managed accounts or taking out accounts with building societies without a local presence. On entering an IVA we pose no credit risk as we can’t borrow and on completing IVAs we are a lower credit risk than our peers because we have no unsecured debt, are skilled at budgeting and will borrow responsibly because we have seen the dark side. I am less of a credit risk now than when my new bank offered me an £800 overdraft…at which point I was in the process of drafting the proposal because my level of debt was greater than my annual salary and I was behind on the payments for every single one of my debts.
Also, why insist people in IVAs pay a prohibitively high deposit for mortgages…the borrowing is secured anyway. It is not as if having once been in an IVA causes your house to depreciate more than the house of someone who hasn’t been in an IVA. And in many cases the affordability will be improved because we don’t have other debts. I guess I hit the nail on the head with prohibitively – they can refuse to lend based on their “crieteria” and we have no recourse to complain.
I guess in one way, there is a business reasoning behind refusing current accounts to people with IVAs as they are providing us with a loss leader service without having the opportunity to sell in any of their income generating products (I include charges in this category). And in a capitalist economy, why should a commercial organisation provide a free service? Well, because they signed up to widening access to bank accounts and being more sympathetic to customers in financial difficulty for a start. And for second, because their industry has been the recipient of government funding (our taxes) and so they have an obligation to their shareholders (us). I forget how much every taxpayer has contributed to propping up the banks but I know it’s so much that if I took my share back it would pay off all my debts and leave me with change.
It also shows that banks are not accepting their share of responsibility for the debt epidemic. Lets not forget that while they are willing to write down a proportion of our debt, many of us have paid interest for years without ever reducing the capital so in effect, they are writing off a smaller amount than would first appear when you look at the dividend. In many cases i’m sure they break even and in others still profit. I was paying over £2000 a year in interest alone to one of my credit cards – capital debt £5,000. So agreeing to the IVAs is in many cases lip service to treating their customers fairly and acting sympathetically towards customers in debt. HSBC and First Direct are neither of these two things when they trawl the Insolvency register to kick people off their books without reference to the status of that person’s account…in most cases we hear of these accounts are run satisfacorily without any debt going into the IVA. These disgusting banks are actively seeking to discriminate making them the worst of the bunch.
There are even cases where banks choose not to differentiate between IVAs and bankruptcy in order to refuse facilities or charge a higher rate of interest.
I am not absolving myself of responsibility by wanting the banks to step up but they know they’ve done wrong; otherwise why so many changes to The Lending Code, why so many sackings, why the call to strengthen regulation, why curtail bonuses? Because they were irresponsible too. I look at the situation as they gave me the rope and I hung myself with it…yet we are paying our dues and they don’t even have the decency to treat us with respect.
Congratulations to anyone who made it this far!!!!