Banks using 'pseudo' solicitor firms to make debtors pay up

Threatening legal letters from what appear to be solicitor firms are actually coming from a department of Lloyds or NatWest

• Rupert Jones and Patrick Collinson
• The Guardian, Friday 4 July 2014 07.00 BST

High street banks use in-house solictors to send letters to struggling customers who may believe the letters were sent by a third party.

Britain's high-street banks are routinely issuing legal demands from what appear to be independent firms of solicitors designed to make struggling borrowers pay up. Yet the firms are not regulated by the legal profession's watchdog, and are simply names used by banks' in-house lawyers.

Royal Bank of Scotland and its NatWest arm have been using Green & Co Solicitors in Telford; Lloyds Bank uses SCM Solicitors in Hove, East Sussex, and, until January this year, HSBC used DG Solicitors in Edgbaston, Birmingham.

But a search of the register run by the Solicitors Regulation Authority (SRA) reveals that none exist as an entity supervised by the regulator.

The practice is legal because the letters are signed by a lawyer who is individually regulated by the SRA. Yet they give the impression to borrowers that their case has been escalated to a third party, using legal language such as "We are instructed by our client" and "We are likely to be instructed to commence court proceedings". The letter heading is near-identical, too, to that of an independent firm of solicitors, and typically uses a different address from that of the bank concerned.

Critics claim that the letters can be confusing and a scare tactic designed to harass people into paying up. But the good news for consumers is that since Guardian Money and others began probing the issue, the SRA has revealed that it will soon issue guidance after receiving a number of complaints that had given it "cause for concern".

And on Thursday, RBS disclosed that after a review of the letters it sends, it was stopping the use of any solicitor or debt-collection brand names that "could cause confusion".

The banks use a form of wording in the small print of the demands that identifies the solicitor "firm" as a unit of the bank. RBS says Green & Co is the "practising name of solicitors employed by the Royal Bank of Scotland Group", while Lloyds says SCM is "part of the in-house litigation department of Lloyds Banking Group".

Some will be surprised to learn that a company can explicitly use the word "solicitors" in its name and yet not be regulated as a firm by the SRA.

The SRA said that SCM Solicitors, for example, ceased trading as an independent regulated law firm in 2011, adding: "The firm is not a firm as an entity – it's just a trading name."

That, arguably, is a somewhat confusing distinction that may well be lost on the panicking recipients of the letters.

The tactics banks use to persuade people to pay up have come under the spotlight after the already notorious case of payday lender Wonga.

Last week it was ordered to pay £2.6m in compensation after it sent letters, to customers in arrears, from bogus law firms – such as Chainey D'Amato & Shannon – leading customers to believe that their outstanding debt had been passed to a law firm or another third party. There is no suggestion the banks are acting in the same way as Wonga. The crucial difference is that Wonga sent letters from fake lawyers, whereas the individuals signing the letters from the banks are authorised and regulated by the SRA.

But there is concern that, unless the people who receive the letters study the small print, they may feel duped into believing that their bank has escalated their case to a third-party firm, and that proceedings are imminent.

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." It pointed out that every letter sent out bore the name of a solicitor within the department who took responsibility for that letter. The correspondence also confirms the solicitor is authorised and regulated by the SRA, and gives that solicitor's registration number.

A spokesperson for RBS told Money: "Our customers should never be in any doubt about who they are communicating with. We have reviewed our policies in this area, and will stop the use of any solicitor or debt-collection brand names in correspondence with our customers that could cause confusion."

The bank said Green & Co had not taken any new business since 2012, and had only "a handful" of cases open, though it acknowledged that "we must make it clearer" to customers that it is an in-house RBS team.

It added that Green & Co "is a legitimately established law firm, registered with the Law Society, and its solicitors are regulated by the SRA".

HSBC said that in January this year it abandoned sending out legal warnings under the name of DG Solicitors and now just uses the HSBC brand.

"HSBC stopped using DG Solicitors in January 2014. All customer letters from DG Solicitors were compliant with the OFT debt recovery rules, and made clear that the firm was a trading name of HSBC and that its people were HSBC employees. To allow HSBC to be more flexible in how it works with customers in arrears, all legal correspondence to these customers is now under the HSBC brand."

A Guardian Money reader raised her concern about SCM Solicitors after it sent demands to her former tenant in Cambridge, saying that it had been instructed by its "client", Lloyds Bank, to demand he repay the outstanding debt on his current account. If payment was not received within 14 days, "legal proceedings may be issued against you", it continued.

The name of SCM Solicitors is prominently displayed in bold type at the top of the letter. In small type at the very bottom, it states that SCM Solicitors is part of Lloyds.

The woman contacted the SRA to find out more about the firm – only to be told that it had closed in June 2011.

The SRA says bank legal departments are able to operate under a trading name, even though the entity is not formally a legal firm in the sense of it having separate SRA regulation, professional indemnity and so on.

In an email to the bank, the Guardian Money reader said she was astonished that it could "apparently be permitted to use a non-existent firm of solicitors to mislead and intimidate its customers into action. I thought our ex-tenant was the bad guy – he's not bad, more hopeless. Lloyds Bank are not hopeless, and you have the capacity to fully understand and select the means by which you operate."

She added that the woman who signed the letter was a registered lawyer, "so for her to represent that she is a member of a solicitor's firm that is threatening legal action but which doesn't, in fact, exist, is rather odd".

In an email to the woman, a senior member of the banking group's legal department described the use of the name SCM Solicitors in letters as "a style for correspondence … the use of the style is one that has been reviewed and deemed appropriate by the SRA".

In a separate email, the woman in Lloyds' legal department who signed the letter appeared to indicate that she was not entirely happy with the way the SCM name was being used. She said she inherited the arrangement when she joined the bank, adding: "At my instigation ... the model is being actively reviewed."

In a statement to Money, Richard Collins, the SRA's executive director, says: "We can confirm 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 they are an independent law firm and not employed solicitors."

The debt collectors that aren't what they seem

It's not just banks sending out demands made to look as if they are from a third party. Those from some utility companies and parking firms appear to be from a separate debt collection agency, when the "firm" has been invented as a way of pressurising people to pay up.

Typically, there's small print to the effect the debt recovery firm is a "trading name" of the bank/utility company.

This week the Student Loans Company (SLC) – a government-owned organisation – was found to have sent thousands of letters to graduates appearing to be from an independent debt agency, Smith Lawson & Company Recovery Services. Some began: "We are instructed by our client ..." In fact, Smith Lawson is a trading name of the SLC. On Tuesday, after an outcry, the SLC said it had "suspended all use of Smith Lawson-branded correspondence".

Meanwhile, many customers of Royal Bank of Scotland and NatWest have received letters from "Triton Credit Services", whose address is given as a post office box in Basildon, Essex. Some stated that Triton had been "instructed" by RBS/NatWest, though the small print said Triton was a trading name of the bank. This week RBS said it had decided to "phase out the use of the Triton brand", adding: "In future we will ensure it is much clearer to customers who they are communicating with."

Murali Kartik: How to bowl spin in England

Murali Kartik in Cricinfo

It was my first match for Middlesex and the team's first of the 2007 Championship. We were playing in Taunton against Justin Langer's Somerset. Ed Smith and Richard Pybus, the Middlesex captain and coach, had told me that I would be only filling in for our four seamers with the odd few overs before lunch, tea, and towards the end of the day.

Middlesex had scored 600 for 4 in their first innings. Left-arm spinner Ian Blackwell had taken one wicket. When it was our turn to bowl, Marcus Trescothick smashed our fast bowlers and Somerset racked up 100 for 1 in about ten overs.

Off my first ball I had Trescothick caught bat-pad at short leg. The guy who was told he would bowl only ten overs in the day ended up bowling 50 and finishing with 4 for 168. The seamers picked up six wickets in the drawn match in which more than 1600 runs had been scored.

You need to be big-hearted to bowl in England. It always boils down to your skill and your heart. That is the lesson I learned in my nine years of county cricket, where I played for four different teams.

India will know that since England don't have a specialist spinner anymore - after Graeme Swann's retirement and the disciplinary issues Monty Panesar is struggling with - it's highly unlikely that they will prepare pitches that will spin big even on the fourth day.

So apart from your batsmen putting up enough runs on the board to let you go out and bowl with confidence, the key to succeeding and remaining consistent as a spinner is to not be attacking all the time. I read that R Ashwin said he would like to be a more attacking spinner. That's easier said than done, especially in England, and given the way Alastair Cook and his men played spin in India in the 2012-13 Test series.

	One of my ploys was to push a fielder deep into areas where I expected the batsman to hit. I was telling the batsman: I'm attacking you, so try and take me on

In first-class cricket in England you need to understand your role on the first few days. If the pitch is not doing much, you become the stock bowler, play with your flight, set in-out fields, depending on the batsman, and give control to the captain and the team.

The conditions also dictate how you bowl. In England it's important to pitch on the right length; for a spinner that is good length. It is a good defensive and attacking length to stick to, particularly on pitches that can be slow. In overseas series, I have seen Ashwin being cut and pulled a lot. You can't lose your lengths in England; you can, at times, play with your lines.

Another important element to bowling well in England is to put a lot of body behind the ball. As Sanjay Manjrekar has repeatedly pointed out, many Indian spinners use their shoulders and fingers to impart turn, which is why they don't get enough out of unresponsive pitches, unlike Australia's Nathan Lyon, who can generate bounce even on pitches that do not take turn because he uses his body a lot more.

During India's first tour match of the 2011 tour to England, against Somerset, Amit Mishra went for some runs despite having bowled well on the second day. When he asked me how I bowled on such pitches, I told him that he had to realise that spinners will be hit. So you need to play around with the batsman's mind and the field placements.

One of my ploys was to push a fielder deep into areas where I expected the batsman to hit. I would place a deep midwicket to Trescothick, who played the lap shot really well and frequently. People might say it is a defensive mindset but they should understand that I am trying to block the batsman's big shot.

You should not be reacting after a shot has been hit. Instead I was telling the batsman: I'm attacking you. I have close-in fielders but I am also placing a fielder here for the big shot, so try and take me on. Sometimes it plays with his ego but it also brings me comfort and gives me freedom to experiment.

In England it is also a question of mind over matter. It is about sticking to your strengths and doing your job. You know the weather can be cold. You know that sometimes the pitches are going to be really slow and might not take spin. When nothing is going well for you, and this happens to every bowler, you must stay positive and bowl well.

It is not always about thinking of wickets. It is about biding your time. You have to adopt a role: if it is cold, keep lots of hand warmers with you; if the pitch is not taking spin, tell yourself you are going to stick to your lengths; play around with the fields; play with the batsman's mind; stick to your strengths.

Indian seamers won't find it hard to get used to the Dukes ball in England since it's similar to the SG ball they bowl with at home © Getty Images

John Emburey, the former Middlesex and England offspinner, told me that it was always good to try things. He said that at Lord's, spinners, especially left-arm ones, usually bowl from the Nursery End to take advantage of the slope. Emburey, who was accustomed to bowling from the Pavilion End, would switch sides with former England left-arm spinner Phil Edmonds to bowl from the Nursery End and bowl tighter lines on the off stump to force the outside edge. So it is important to be aware and open to doing things that you will not generally do.

One advantage the Indian spinners have is, they will not find it hard to get used to the Dukes ball, because it is similar to the one they use at home, the SG Test ball, which has a pronounced seam. The Dukes ball stays hard throughout, which is a good thing for a spinner, especially on a dry surface.

At times, more than the pitches, it is the success of the seamers up front that plays a vital role in the spinner being effective. Some of the surfaces in England can be really slow, especially at Lord's and The Oval. There is nothing for spinners at Trent Bridge. The Old Trafford pitch can break up, but at the Rose Bowl it won't.

Overall, the pitches are not going to be conducive to spin, especially in the wake of England's series defeat against Sri Lanka.

Syria/ISIS: UK planned to train and equip 100,000 rebels

 By Nick Hopkins Investigations correspondent, BBC Newsnight

The UK drew up plans to train and equip a 100,000-strong Syrian rebel army to defeat President Bashar al-Assad, BBC Newsnight can reveal.

The secret initiative, put forward two years ago, was the brainchild of the then most senior UK military officer, General Sir David Richards.

It was considered by the PM and the National Security Council, as well as US officials, but was deemed too risky.

The UK government did not respond to a request for comment.

Lord Richards, as he is now, believed his proposal could stem the civilian bloodshed in Syria as rebels fought troops loyal to Mr Assad.

The idea was considered by David Cameron and Dominic Grieve, the attorney general, and sent to the National Security Council, Whitehall sources said.

It was also put to senior figures in Washington, including General Martin Dempsey, the US's most senior military officer.

While it was thought to be too radical at the time, US President Barack Obama said last week he was seeking $500m (£291m) funding to train Syrian rebels - an echo of Lord Richards' plan.

Insiders have told BBC Newsnight that Lord Richards, then chief of the defence staff but since retired from the military, warned Downing Street there were only two ways to end the Syrian civil war quickly - to let President Assad win, or to defeat him.

'Extract, equip, train'

With ministers having pledged not to commit British "boots on the ground", his initiative proposed vetting and training a substantial army of moderate Syrian rebels at bases in Turkey and Jordan.

Mr Cameron was told the "extract, equip, train" plan would involve an international coalition.

It would take a year, but this would buy time for an alternative Syrian government to be formed in exile, the PM was told.

Once the Syrian force was ready, it would march on Damascus, with the cover of fighter jets from the West and Gulf allies.

The plan envisaged a "shock and awe" campaign, similar to the one that routed Saddam's military in 2003, but spearheaded by Syrians.

'Chemical weapons'

Though the plan was put to one side at the time, Mr Cameron was later persuaded to consider military action when evidence emerged of chemical weapons use in Syria.

However, MPs voted against giving authority for a direct intervention last August.

The US and UK accused the Assad government of being behind the attacks, but Damascus blamed rebel groups.

Monzer Akbik, spokesman for the Syrian National Coalition, an opposition alliance, said: "The international community did not intervene to prevent those crimes and at the same time did not actively support the moderate elements on the ground.

"A huge opportunity was missed and that opportunity could have saved tens of thousands of lives actually and could have saved also a huge humanitarian catastrophe."

'No good options'

Professor Michael Clarke, of the Royal United Services Institute think tank, added: "We have missed the opportunity to train an anti-Assad force that would have real influence in Syria when he is removed, as he will be.

"I think there was an opportunity two or three years ago to have become involved in a reasonably positive way, but it was dangerous and swimming against the broader tide of history… and the costs and the uncertainties were very high."

He said it was now too late for the West to get involved.

"Western policymakers in a sense have got to have the courage to do nothing and to work on what comes after the civil war," he said.

"There are no good options over Syria. It is a slow-motion road accident."

Tens of thousands of people have died and millions more have been displaced in three years of civil war in Syria.

More banking scandals to come, admits Treasury Minister Andrea Leadsom

Andrew Grice in The Independent

More scandals in the financial sector are in the pipeline, the Treasury Minister responsible for the City of London has admitted.

Andrea Leadsom, who previously worked in banking and finance for 25 years, warned that there were more "cringeworthy announcements" to come and that there was "still a lot of baggage" in the financial industry.

Ms Leadsom, who held senior roles at Barclays and Invesco Perpetual before becoming an MP, told the parliamentary magazine The House there was still a long way to go change the City’s culture. Asked whether it is learning the lessons of the financial crisis, she replied: "I would say that at the top echelons of the banks, absolutely. But I think there's quite a long way to go to really change the culture. I think it did become very transaction-oriented and I think it will take time to recover that. I think we are still going to see a lot of cringeworthy announcements."

She admitted that when she heard about the Libor interbank lending rate scandal, she thought: “Well, if Libor is rigged, then what wasn’t rigged?”

Mrs Leadsom said: "We've had a number of issues over bank wrongdoing. There are inquiries going on, there are some pretty serious allegations out there, we've still got PPI going on. There are still things happening and redress under way. So it's quite difficult to just forget about that and move on. There's still a lot of baggage.”

Shortly after she was appointed Treasury Economic Secretary in April, The Independent revealed that she had previously used trusts to reduce her potential tax bill and offshore banking arrangements for her buy-to-let property company.

In the interview, Ms Leadsom declined to say whether she would vote in favour of the HS2 project - even though it is championed by her Treasury boss George Osborne. It would affect her South Northamptonshire constituency and while she is a backbencher, she opposed the Bill paving the way for the scheme. “I’m absolutely firmly committed to getting decent compensation and mitigation for my constituents and I think there’s a long way to go yet,” she said.

She also departed slightly from the party line on Europe, saying that there might be case for leaving the EU. The founder of the Conservative Fresh Start project aimed at getting a better deal for the UK, she said: "Obviously [if there's] a nonsense reform that doesn't achieve anything, then it might be. But at the moment I've spent four years working extremely hard trying to find things that would make it worth staying in."

Ms Leadsom dismissed calls by Tory Eurosceptics for David Cameron to set out his shopping list of demands for the renegotiation of Britain’s membership terms.

Defending the controversial Help to Buy mortgage guarantee scheme, she said: “Overwhelmingly, it's achieving its aspiration of helping people to get their first home. I get many more letters from people saying 'I'm desperate to get a mortgage, why have you done this mortgage market review?' rather than people saying 'oh, you know, property prices are ridiculously high".