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News of the Week
Banks are under more pressure it seems in various parts of the world to behave in a more reasonable and responsible fashion. Stories in this week's newsletter from the US, UK and New Zealand show more action being taken by regulators to support consumers in bank related issues of fairness and reasonableness. Is this another blip or a trend? Time will tell. It's feeling more like a trend at the moment.
There can be no doubt however that bank's in most areas of the world are wide open to easy lawsuits for unfair behaviour and unreasonable actions against consumers. Even in these most modern of times bank actions by collection or recovery departments almost beyond belief.
Take for example the case we are working on this week where Myvesta UK has a client that has debts with a bank that has offices in Hong Kong and the UK and the UK division is trying to assert repayment preference over Hong Kong division. Even internally the bank can't be fair or reasonable.
Collection actions like this only demonstrate a selfish "me first" attitude exhibited by creditors and rather than create good solutions to help problem debtors overcome their troubles, banks around the world do more to force debtors into situations where they cannot repay.
Now that statement might sound illogical, but it is just the reality on the front lines around the world. The biggest issue is helping consumers to repay their debts when they get into trouble; it is actually trying to get creditors to act in a reasonable and fair way to allow them to get repaid. The silly thing is that this could all be easily resolved so the consumer can pay and is happy and the lender can be repaid and is happy. It just does not have to be this contentious or difficult.
Now, if you are the chairman of a bank and you are reading this and feel that your recovery or collection department isn't chasing consumers to insolvency and discouraging getting repaid, you are smoking something illegal and have no idea what is really going on. It almost defies logic that banks spend so much money to attract new customers and then when someone experiences an unexpected financial bump in the road they then spend so much staff time and money teaching the customer to hate them and bad mouth them.
I can only hold out hope that a major lender would be strong enough to invite the Myvesta Foundation in to consult and show them how easy it would be to make some changes, to allow consumers to repay their debts, be treated reasonably and fairly to reduce their liability and win a client for life that is proud to brag to others about how great their bank is.
By the way, word on the street today is that another major credit card company in the UK has joined the ranks of banks and instructing their representatives to reject all fair and reasonable repayment proposals from consumers. But on the flip side, a class action lawsuit is proceeding against another bank in the UK. A lawsuit that could have been easily avoided if the bank had just been willing to actually honor the banking code they subscribe to and do what they say they will do in their marketing to attract new customers.
Steve Rhode
President
Myvesta Foundation
Today's Top Stories
Myvesta Expands
Global social enterprise, Myvesta, has added to their country-expansion list this week. The US founded organization first expanded to the UK and has since opened up an office in the Netherlands. The English and Dutch speaking office opened on the first of May and is Myvesta's first continental European office. More information can be found at Myvesta.nl
Could this be the end for joint IVAs?
The Insolvency Service feels that joint Individual Voluntary Arrangements (IVAs) should not be permitted by legislation and that they can offer better legal advice instead. However, this is being seen as a backwards step in administration making it harder for people to clear up their financial difficulties. If joint IVAs are not permitted anymore this could push the debtors' spouse or partner into "financial purgatory or bankruptcy".
The US joins the "unfair charges" battle
This week growing complaints about "unfair" business practices from credit card companies caught the attention of US House legislators. They have one bill intended to ban universal default clauses in contracts and another devoted to end double-cycle billing.
How much is that Doggy in the virtual window?
New York City resident, Janet Goris, could face up to four years in jail after being charged this week with fourth degree grand larceny, fifth degree conspiracy, petit larceny and second degree scheme to defraud. Goris "sold" English pit bulls on the internet to four unsuspicious people, charging them $300 to $400 per pup (which were never delivered). Goris will return to court later this month for her final sentence.
No good deed goes uncharged
The five biggest banks in the UK cumulatively made £41.3 billion in profits. Even though they are well off banks may be getting too greedy for money with the fees they are starting to charge people. One example being of people who have accounts with MBNA and Virgin Money that have a positive balance for more than 12 months on their credit will be charged £10. This might be able to be avoided but people will have to keep a keen eye on their monthly statements since under the Banking Code you have 30 days notice to contest the charges.
NZ ComCom strikes again
Last year New Zealand's Commerce Commission demanded companies to refund millions in hidden fees. The Commission strikes again this year as they investigate credit card fees for late payments. On top of the refund they issued civil proceedings for price-fixing in relation to fees paid by retailers.
Killing spree triggered by debt
In Kansas this past week, a man went on a killing spree, suspected to be triggered by debt among other factors. David Logsdon who lost his job at his local shopping mall last year returned this week where he shot and killed two people. Police believe his original intention was just to raise havoc but it obviously escalated to more than a public disturbance. Logsdon, who has a history of mental illness, alcohol abuse and just under $10,000 in debts, was later shot down by police, preventing further homicides.
Korea's unused credit cards
A recent study showed that one in three credit cards issued in Korea are rarely ever used. Having Korea experience 28.2 million inactive cards (32.6% of all cards issued). However, while the cards collect dust in the wallet, owners are still paying a fee for them. Kim Joon-hyun, a Financial Supervisory Service official, said, "the issuers will be instructed to change their contracts so that they can terminate long-term inactive cards without their owners' request".