It would appear that landlords may well be the subject of informal credit checks by their mortgage providers according to a report published by several High Street lenders in the UK.
Banks partly state owned
In what many view as a public relations gaffe, it won’t help that some of the lenders in question are part owned by the tax-payer via the Government and accusations of a Big Brother attitude by the Government have already been mentioned.
Investigation will involve thousands of accounts
In what can only be described as a highly unusual procedure, staff at the Northern Rock and Bradford and Bingley banks have been told to run credit checks on mortgage and personal loan customer accounts. It is quite normal for a lender to run a check on a new customer but almost unheard of for such checks to be carried out on long standing customers. The banks have admitted that customers won’t know if they have been checked unless the bank contacts them because it is concerned about their spending. The banks reckon they will probably contact over 30,000 customers to suggest they handle their financial accounts more diligently.
Where will it lead?
A spokesman said the banks were being proactive in helping customers avoid getting into financial difficulties and would help them put their monetary housekeeping in order. They say they will advise customers to cut back on non essential spending, but it is easy to see the idea could become a little more sinister. For instance a bank could say to a landlord we have noticed you are spending x amount on empty property insurance, we can offer you a better deal. Now this may well appeal to some customers whereas others may think that direct debits and payments they make from their account should remain private.
Policy may drive customers away
The action is all the more puzzling when one looks at the rate of repossessions due to non payment over the last few years. Most experts agree the low interest rates over the last few years have kept repossessions much lower than could have been anticipated and with little prospect of growth in the economy in the near future the status-quo for the bank rate should remain.
At a time when most banks are looking for new custom one cannot imagine buyers of homeowner insurance rushing to open an account at either of the banks mentioned.