The government has said that it has an agreement with the banks such that repossession will be a “last resort”. BBC Radio 4’s File on Four has put this ‘agreement’ to the test and placed a big question mark over whether there is any substance to this agreement.
The programme reported on the case of a woman in Bristol who is a single parent with 2 children, aged two and twelve. She was in financial difficulties as a result of the break up of her marriage following a venture by her husband who gave up his job to launch a restaurant.
She was struggling to pay the mortgage of £1,100 a month. To manage the problem she proposed that the mortgage was extended beyond the 14 years left to pay. This would enable the payment to be reduced to between £700-800 a month, which she felt able to manage. But she could not get any joy from the holder of her mortgage, HBOS. They determined to make a single parent homeless.
The curious thing about this decision was that the woman in question was an HBOS employee of 24 years standing! If they were unsympathetic towards her then you have to wonder what chance would anybody else facing difficulties making their payments have?
The journalist found it impossible to get an interview with a senior HBOS manager. Instead they issued a statement. Despite the fact that she was an employee HBOS told the BBC that the woman was hard to get hold of and that she had never made them an offer! The journalist checked out her appearance at a County Court, and lo and behold an offer had been made. So reasonable was it that the magistrate had been surprised by the intransigence of HBOS.
Following the involvement of the BBC, HBOS relented at the eleventh hour, and an agreement was struck so the repossession did not go ahead. However, not many people facing such a situation will be lucky enough to have their case broadcast and threaten public embarrassment for a bank.
What is clear is that such a ‘gentleman’s agreement’ cannot be policed. It underlines the need for socially owned banks whose purpose is not maximising their profits and ignoring the social consequencees of their actions.