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Banking chief calls for tough love on repossessions

A policy of tough love would be fairer on homeowners struggling to keep up with their mortgage payments, Richard Banks, chief executive of UK Asset Resolution, has claimed.

In an interview with the Guardian, the chief of the body that runs Northern Rock Asset Management and Bradford & Bingley’s mortgage books also said that Britain is facing a tsunami of repossessions as soon as interest rates start to rise.

Banks says that the government’s policy at the beginning of the financial crisis to urge lenders to use forbearance and keep people in their homes is forcing some homeowners further into debt.

He told the Guardian: “We as an industry, as a kneejerk reaction in the emergence of the crisis and because the government asked us to be forbearing to customers in the hope it would all go away, we have been too lenient with some customers.

“It’s a tough love approach. It’s treating customers fairly, not nicely, because if you can’t afford your mortgage you are only increasing your indebtedness.

“If we allow you to increase your indebtedness, that’s not really fair to you.”

Banks adds that the number of people falling into arrears could be scary if lenders fail to prepare for base rate increases.

He says: “You can see if you don’t do something about it, you can see a tsunami. If you don’t get into the hills you could get drowned by this. If you don’t manage this properly it could get very messy.”

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  • Stephen Feeney 29th August 2011 at 1:00 am

    Richard Banks speaks with absolute arrogance. How can reposession ever be favourable to someone trying to keep their home and life together.
    The banks and their cavalier attitude to money have caused this crisis in the housing market.
    We as tax payers bailed out the banks. Northern Rock would not exist without Government intervention and our money. So shut up about being kind.
    RBS group were almost sunk by Sir Fred’s arrogance in playing with £70bn of cash reserves has caused most pain. Now people can not get a mortgage without a huge deposit and this has stiffled the first time market. In turn the rest of the market slows.
    We are being done over twice by the banks and now this well meaning idiot wants to give tough love. I’ll tell you what tough love you need mate:
    A ban on bonuses in banks in excess of 25% of salary;
    No chief executive to be paid bonus of more than three times the lowest paid;
    No bonuses at all while banks are in loss.
    It will do you good in the end you patronising banker.

  • Ian Carter 28th June 2011 at 4:07 pm

    This would only be said by someone in a well paid job with his mortgage paid off from his generous bonuses. Mr Bank, would you really believe the same if your son’s house was being repossessed?