Vulnerable people are being exploited by companies who do know better.
Sitting in the Treasury select committee on Wednesday was like watching Daniel being fed to the lions. Except Daniel at least survived his ordeal.
Poor Tim Hinton, an executive from Lloyds Bank, was supposed to be answering questions on lending to small businesses.
Instead he was lambasted for a good 15 minutes by committee members barely hiding their anger at letters sent by Lloyds to customers in arrears.
One MP, leaning forward with such menace you almost expected him to leap across his desk and grab Hinton by the lapels, described the letters as a ‘sham and a fig leaf’ to convince recipients that an independent legal firm had now been instructed.
The angry committee member was, of course, entirely correct. These letters, headed with SCM Solicitors, which opened with the sentence: ‘We are solicitors for Lloyds Bank plc and act for them’ were an attempt to convince people that their arrears were now being taken more seriously, and the repayment was now more urgent.
By seeming to involve a law firm, the bank clearly wanted people to believe the ante had been upped.
Hinton said people would not necessarily assume the letter was from an independent firm (begging the question: why create the firm at all?) and people could at least read the small print.
But either there was something fascinating on his desk or he wasn’t entirely convinced by his argument, because as he gave evidence his gaze seemed to drift further and further down until he was barely comprehensible.
Of course people weren’t supposed to read the small print: if the information really was supposed to be read and understood it would have been in large print.
What has surprised me since the Wonga story, in which it was revealed the payday lender had created fake law firms to use for debt recovery letters, is the relative lack of public outrage that this goes on.
The City of London Police quickly announced they would consider whether to investigate, but three weeks on there is no further news and hardly anyone has bothered to keep asking.
Some commenters have even suggested there was little wrong with what Lloyds did: one likened it to a security guard wearing a uniform similar to the police to give him more authority. Except the true analogy would have the security guard wearing an actual police uniform but with his actual identity hidden on the soles of his boots.
This isn’t about law firms carping about missing out on work – although clearly the companies would be best advised to work with independent firms rather than hide under this cloak of independence.
This matters because it’s the most vulnerable people in our society being exploited by the biggest corporations in the country.
This matters because people already in debt are being made to feel threatened by letters deliberately given a false extra weight by the presence of a law firm.
Corporations know exactly what they’re doing in sending these letters: they’re designed to scare people into paying up.
To suggest otherwise is entirely disingenuous – realising that is presumably among the reasons that Lloyds decided to stop heading the letters ‘SCM Solicitors’.
John Hyde is a Gazette reporter