Lloyds leads loyal graduate even deeper into debt

Published 10th Oct 2009

Customer receives letter informing him that overdraft facility will be withdrawn, then offered 29.9% loan to pay it off

Lloyds Banking Group has come to the conclusion that, having swallowed HBOS in its entirety, it has a "clear role to play in society". According to its website, it means to fulfil this by "helping our customers every day".

As good as its word it decided to save new graduate Lewis McInnes from financial folly by ridding him of his overdraft. Last month McInnes, who has held an account with Bank of Scotland since childhood, was surprised by a letter informing him that his £2,300 overdraft facility would be withdrawn in two weeks time.

McInnes, who has a small but regular income, had received no previous warning of this, nor did he have the funds to pay off the entire sum so quickly. However, he assumed that such a helpful bank would allow him to reduce the debt in stages and he rang to discuss affordable repayments. Lloyds was having none of it. "I was abruptly informed that nothing could be done until the deadline was passed and that only if, by then, I had exceeded my authorised overdraft limit could they help," he says.

The next day he spent an hour on the phone being waltzed around departments and the conclusion was unanimous: he could only be assisted once he had run up bad debt. Until, that is, someone came up with the wonderfully logical solution: he could take out a £2,300 loan to pay off the £2,300 overdraft. He was therefore offered a three-year loan at an interest rate of 29.9%. Unsurprisingly McInnes was not tempted and turned to the Guardian for solace.

"I feel this is no way for a bank to treat a young graduate, who in the toughest job market for 60 years or so, hasn't struck gold in the job market immediately," he says. "Offering someone like me a loan with 29.9% interest, in a recession (with loans like that helping us get into the mess we're in) is quite outrageous."

Lloyds press office requires a couple of hours of reflection before deciding that the letter demanding repayment of the overdraft was sent in error and that the bank had never seriously considered depriving McInnes of his funds. "We always give customers notice if we intend to make any changes to their overdrafts and always give them the option to repay in instalments," says a spokeswoman.

Odd then that none of the many staff McInnes spoke to during his many hours on the phone realised the mistake. Even odder that all of them insisted that the only way for McInnes to fulfil the letter's demands was to get himself even deeper into debt. Lloyds replies that it is investigating how all this came to be and, in a spectacular show of contrition, it is donating £10 to McInnes's account. His overdraft allowance will now remain intact, but it would be interesting to know how many other customers have received similar letters "in error".

Source: ' Guardian '

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