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It’s Never the Wrong Time to Do the Right Thing

This week, the UK’s biggest Payday lender Wonga came out and admitted that due to an internal system error it double charged its customers – not good. Cash is always King in the financial world but the nature of the short term urgent cash requirements of a typical Wonga customer means they are already strapped for cash.

Double billing any customer is obviously wrong, but this crisis loan borrower in particular would be immediately financially vulnerable to not affording necessary every day household costs. Wonga, on this occasion to its credit, immediately admitted the problem and rectified the matter for all of its customers - they put their hands up.

This for me was a real breath of fresh air and, post an early morning cup of tea reflection of the current financial landscape, it really got me thinking…it’s never a wrong time to do the right thing.

Payday lenders have come under sever attack from the Financial Conduct Authority (“FCA”) and in my view rightly so. The FCA has sought to police and protect everyday consumers from financial terrorism which is the only way to describe how such companies in the past appear to have intimidated and preyed on the weak and vulnerable of our financial society.

So what have the FCA achieved? Some Payday lenders have left the market and those behind have tidied up their act. The question I have is why the same approach and principles by the FCA can’t be applied to the larger High Street Banks? Are they considered too big to fail?

One bank that is under the spotlight is Royal Bank of Scotland (“RBS”) and locally their NI subsidiary Ulster Bank. An FCA report commissioned in 2014 into RBS / Ulster Bank GRG in respect of allegations of systematic malpractice has had a recent update. The independent consultancy firms have now handed in their findings, and post a review by the FCA, it is now hoped the report will be published by the end of the year.

Locally, the Head of Ulster Bank Richard Donnan has recently quoted to the media that their business banking “requires a mindset that values relationships over products…isn’t about looking for an immediate return”. What is clear in contrast to this statement, is that the Ulster Bank have sought to achieve immediate returns by selling the larger GRG managed distressed debt book to American Vulture Funds. They also continue to package and sell smaller loans so it will be interesting to see if this “mindset” outlined by the head of the bank is reflected in the FCA report.

The International Monetary Fund (“IMF”) recent report notes that the banks are stronger now than they were before the financial crisis – which is great news. They have more capital on their balance sheet but are struggling to make money and the problem is they are still burdened with distressed debt which they have not dealt with making it difficult for them to lend new money. The fact is, the banks need the borrowers and the borrowers need the banks for economic growth and recovery.

Our team of experts have been mediating amicable agreements with the banks to re-structure or write off debt for the benefit of both parties. It’s never a wrong time to do the right thing so contact us now if you want to help alleviate your debt concerns and contribute to rebuilding the local economy. Call GDP Equity Experts on 028 92 444 555.

Darwin AllenComment