NIFA accountant uncovers ‘bank behaving badly’
A BBC ‘File on 4’ investigation has uncovered what it described as reckless lending by a leading HIgh Street bank that reportedly led to companies being forced out of business over ‘excessive’ charges and bad practice.
One of the two companies featured on the programme, Cotton Bottoms, secured a £ 400,000 loan from HBOS. But the bank classified the loan as ‘high risk’. Company founder, Joanne Freer, said that this meant that it came with ‘draconian strings’ including a one percent overdaft fee, a £ 20,000 ‘one off’ arrangement fee and a requirement to pay £18,000 a year for the services of a non-executive director of an outside consultancy, Quayside Corporate Services. Cottom Bottoms struggled to pay and was eventually sold by Mrs Freer for what she described as ‘cheaply’.
The programme alleged that this example was part of a wider, poor attitude towards lending on the part of the bank and called in NIFA member, David Winch, to investigate the financial documents of 18 different companies involved with HBOS and QCS.
After examining the records, Mr Winch told reporter Allan Urry: "I was shocked by what I found".
Mr Winch said that he found that 13 companies that had entered insolvency owing £275m to the bank but only a fraction of that had been recovered.
Where David Winch looked in detail at the trading histories, he said there was a "clear and obvious risk to the bank that this money couldn’t be repaid."
He added: "I have never seen anything like this with these sort of figures, we are talking losses suffered by the bank of £250m, even for a large organisation to lose £250m is quite shocking."
Both HBOS and QCS deny bad practice. In reply, solicitors for QCS also labelled Mrs Freer as irrational, rude, un-cooperative and obstructive, adding that her company lacked stable and mature management. She denies their allegations.
Share on Twitter