Lloyds sent borrowers letters from its own law firm under a different name for decades, the bank admitted yesterday.
MPs attacked the practice as “calculated to mislead” customers, less than a month after it emerged that payday lender Wonga had made up names of law firms to chase up debt repayments.
The bank set up Sechiari, Clark and Mitchell in the 1980s to collect its debts, chief executive Antonio Horta Osorio explained in a letter to the Treasury Select Committee of MPs.
It used the name on letters when customers ignored normal correspondence from the bank, and needed to be jolted into acting on their debts.
But Andrew Tyrie, the MP who heads the committee, was unconvinced by the explanation and by the sample debt collection sent to him by the bank.
“This is very concerning. The sample letter seems calculated to mislead,” Tyrie said. “Lloyds failed to convince us that this was not the case, or to provide any satisfactory explanation as to why it issued letters in this form, but at least this practice has been brought to an end.”
Lloyds renamed the registered law firm SCM Solicitors in 2009, then dissolved it in 2011.
The name was still used as part of the bank’s internal litigation arm, and in March the bank said it decided to close it down. The last letters bearing its name will be sent in September.
“We believe that views on transparency and clarity have changed,” said Horta Osorio.