The growing scandal of organisations employing non-existent ‘law firms’ to pressure debtors has taken a new turn today, with the giant Lloyds Banking Group the latest to come under scrutiny.

Meanwhile, the Solicitors Regulation Authority is preparing guidance for in-house lawyers, to ensure they do not give the impression that external law firms are involved in customer transactions where this is not the case.  

The Gazette has been alerted to Lloyds’ use of the name ‘SCM Solicitors’, formerly Sechiari, Clark and Mitchell, in letters demanding repayment of debts. The firm, registered at the SRA under number 62032, was dissolved on 30 June 2011.

SCM Solicitors is now part of the group’s in-house litigation department. The bank maintains that letters issued by the department make it clear that SCM solicitors is part of Lloyds Banking Group.

Every letter bears the name of a solicitor within the department who takes responsibility for that letter, confirms the solicitor is authorised and regulated by the SRA, and gives that solicitor’s registration number. 

In a statement, Lloyds said: ‘Letters to our customers identify the qualified solicitor of record and make clear that SCM solicitors forms part of Lloyds Banking Group’s in-house litigation department.’

The statement does however leave open the question of why Lloyds would use a different name unless its intention were to at least imply that it had involved an external firm in the debt recovery procedure.

Responding to a request for comment on Lloyds and SCM, Richard Collins, executive director of the SRA, said: ‘We can confirm that we are currently looking into a number of complaints on this theme which have given us cause for concern. We will shortly be issuing guidance for in-house solicitors on our existing requirement that publicity must not be misleading.

‘This will make it clear that they cannot use forms of words that give the impression that they are an independent law firm and not employed solicitors.’

The issue came to the fore last week when payday lender Wonga was found to have sent letters to customers to indebted customers appearing to come from law firms that do not exist.

The affair has continued to gain political traction, after The Law Society asked the Metropolitan Police to consider whether any offences, such as blackmail or those under the Solicitors Act, have been committed by Wonga in sending fake legal letters to customers in arrears.

Shadow attorney general Emily Thornberry today tweeted that she has written to City regulator the Financial Conduct Authority supporting Chancery Lane’s intervention.

‘Have written to FCA backing @TheLawSociety call for sight of Wonga investigation. Bogus solicitor letters could be fraud,’ she said.

Yesterday the Student Loans Company suspended the use of letters headed with the name of a debt recovery firm that turned out to be its own trading name.

Update 15.59: BBC Radio 4 Money Box presenter Paul Lewis has this afternoon retweeted the Gazette story to his 75,000 followers. He also reports that 'NatWest/RBS are phasing out use of Triton Services debt collectors and Green & Co solicitors - both part of RBS but appearing to be separate'.

A spokesperson for RBS confirmed to the Gazette that Triton is being phased out, adding that Green & Co has not been used for new customer cases since 2012. Lloyds Banking Group said that a decision to phase out the use of SCM had been made earlier this year.