Man 'killed himself over credit card debt'

From: Guardian, UK - Oct 19, 2004

Press Association
Tuesday October 19, 2004

A 21-year-old man is believed to have committed suicide after building up debts of £15,000 on credit cards and a personal loan, a committee of MPs heard today.

The committee was told that the man managed to borrow the money from four different sources despite only being a seasonal worker at the time of his death.

MPs sitting on the Treasury select committee were told how the high street bank Halifax - one of the organisations that lent money to the unnamed man, from north-east Norfolk - employed debt collectors to recover the money even after his death in August.

The committee today questioned the chief executives of major credit card providers about credit card charges and marketing more transparent and fairer on consumers.

Norman Lamb, the Liberal Democrat MP for North Norfolk, told the hearing about the death of his constituent. "A 21-year-old lad took his own life when he was £15,000 in debt," he said.

Mr Lamb said the man's father was convinced that the size of the debt had contributed to the pressure that he was under, and added that he felt passionately about the need to lend responsibly.

The MP said the man had been "in all sorts of problems" with his Halifax credit card, but was then given a personal loan by the bank. "The father notified the Halifax, but the debt collectors have continued to send letters and interest has continued," he added.

A spokesman for HBOS, the group that owns Halifax, said the bank was endeavouring to find out more details about the case.

"We want to look into this as a matter of urgency," he said. "But we acknowledge that we don't seem to have handled this carefully, and naturally we want to get to the bottom of it as soon as possible."

The committee also expressed concern about marketing techniques used by credit card companies.

They heard an example of a deal offered by the credit card provider Capital One, which advertised that people could borrow up to £200 and pay back only £6 a month - the minimum allowed. Mr Lamb asked Capital One's executive vice president for Europe, Fergus Brownlee: "Why don't you say you should be paying off more if you can do?"

The bank executives giving evidence were also attacked over the fees charged to customers. John McFall, the committee chairman and Labour MP for Dumbarton, accused the companies of "skimming money off certain customers - largely speaking, poorer customers".

Card providers were criticised over the practice of sending out credit card cheques as an added incentive for customers - a move some fear could lead to greater debt.

A credit card cheque works in a similar way to a standard cheque from a current account, but the card holder is likely to be subject to fees and a higher rate of interest than that charged on card payments - something the committee said should be made clear to consumers.

It also highlighted the often confusing small print in the summary boxes used in bank literature, calling for terms and conditions to be highlighted in plain English.

Claire Whyley, deputy director of policy at the National Consumer Council, said: "Today's hearing demonstrates that the credit industry has a long way to go before the credit market works in the best interests of consumers.

"Full information sharing between lenders is vital so borrowers already overburdened with debt don't get tipped over the edge. Banks already share information on their mortgages customers, so why not on credit card customers too? The credit industry must stop dragging its feet.

"Putting summary boxes on the back of a promotional leaflet, in very small print - one of the examples highlighted by the committee - will not encourage borrowers to read the important information.

"Our research shows that people want key information clearly presented and grouped together at the front of the document."

The committee will meet again next Tuesday to question executives from credit card providers including Barclays, Royal Bank of Scotland, MBNA and HSBC.

Guardian Unlimited © Guardian Newspapers Limited 2004