The Banking Code Standards Board is to investigate The Royal Bank of Scotland (RBS) after Panorama investigated debt-related suicides.
Watch Panorama on demand on this site to hear a whistleblower break the banking industry's code of silence.

She says that high street bank lending practices put profits before customers at every given opportunity in order to push borrowing.

She is a key decision maker with one of the main high street banks.


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"In all my years of experience in the banking industry, I would say that consumers should be very, very wary of their banks" the whistleblower told Panorama.

This story was first highlighted a month ago by our colleagues on the series Britain's Streets of Debt.

Panorama has fresh revelations about the lending practices of the high street banks.

The insider reveals an industry driven by ambitious targets to sell borrowing to customers.

"I believe the banks are basically neglecting their duty of care. They will have targets on every banking retail product that is available through the branch. And they will have commissions and bonuses on every product.

"It is a very very sophisticated, tailored, tested marketing strategy and sales pitch to a public that has very little knowledge of what is going on."

The insider lifts the lid on the world of credit cards, showing the various ways the banks try to get customers to borrow more on their cards and carry debt over from month to month.

She says that customers who carry over their debts are known as "revolvers".

The insider claims that credit card transactions are carefully monitored by the banks. And they target their marketing according to how much customers are borrowing. She says this is designed to maximise profits for the banks and one of the favoured tools the banks use to increase borrowing on the cards is to raise customers' credit limits.

The whistleblower explains how in many cases credit limits are "automatically increased" and how limits can "literally double" in the space of two years.

"The higher the credit limit, the more the customer is likely to spend.

"It is generally felt in the industry that by increasing the customer's credit limit, by upgrading their card to gold or platinum, you are increasing customer loyalty, and hitting those marketing targets of retaining profitable customers."

THREE CASE STUDIES

Wendy Cullen and Marion McDonald were both widowed after their husbands took their lives, overwhelmed by their debts.

Wendy Cullen's husband Richard took his own life in January 2005. He was a car mechanic earning around £15, 000 a year and in the last six years of his life he secretly amassed £135, 000 on 22 credit cards.

Several lenders had issued more then one card to Richard Cullen.

The Royal Bank of Scotland Group had lent him more than £35, 000 and issued him with four cards under different brand names.

The whistleblower told Panorama: "This is one the worst cases of irresponsible lending that I have ever seen."

Looking at Richard Cullen's statements she said: "There is an inconsistency in these statements in that there are credit limit increases at the same time as we are seeing a history of arrears and minimum repayments."

Several months after Richard's death the RBS agreed to write off his outstanding debt of £35, 000.

The RBS gave Panorama this written statement: "Mr Cullen was a long standing customer of 14 y ears and there was no evidence in the management of his credit cards that he had a serious debt problem. Mr Cullen did not make us aware of the extent of the debt (approximately £100, 000) he subsequently incurred with 16 other providers. it is also regrettable that he never revealed either his or his wife's ill health.

"We have a rigorous and responsible process for managing customer debt, involving a number of escalating stages. Our initial contact will be to establish when we will receive a minimum payment. If this is not forthcoming, the second stage is to contact the customer to discuss a repayment schedule. in Mr Cullen's case, at the end of 2004, we were at the first stage. When it became clear that we were not going to receive the minimum payment we made repeated attempts to contact Mr Cullen without any response.

"The circumstances of his death are tragic and we continue to extend our sympathies to his family."

Marion McDonald's husband Mark's body was found on a railway line in January 2005.

There was no suicide note but his back pack was stuffed full of bank statements relating a tale of massive loans.

Mrs Macdonald did not know how much debt Mark owed until he died.

She has now uncovered the full extent of lending that Mark McDonald's bank, the Royal Bank of Scotland, was prepared to make.

He had loans, two credit cards and a re-mortgage with the bank. When he died his total indebtedness to the RBS was £120,000.

Insurance policies meant that the RBS recovered almost £90,000 of the money Mark McDonald owed.

Initially the bank demanded that the remaining £27,000 of Mark's debt be repaid in full.

Then, after 15 months, it settled for 17 per cent of the remaining debt.

When responding to the BBC's request for a statement the RBS said that a letter sent to Marianne McDonald's solicitor which offered a settlement was never received. The letter got lost in the post. Now the RBS has decided to waive all of the debt.

Commenting on the case, the insider said: "These tragic cases where people have taken their own lives are the cost that is paid for irresponsible lending practices. This is exactly why the banks need to be curbed.

"I think the banks are basically neglecting their duty of care. They are putting profits before human life almost.

"In circumstances like Mark McDonald's it is my opinion there should be laws introduced where criminal charges can be brought against the banks. This is how serious I believe this is."

The RBS told the BBC: "Throughout Mr McDonald's time with RBS we dealt with him in a responsive and professional manner.

"He had a regular dialogue with his personal banking manager and the lending decisions on his account were consistently based on strict lending criteria.

"At no point did Mr McDonald express to the bank that he was struggling with his finances. He managed his current account and maintained regular payments to both of his credit card accounts.

"He kept his credit card accounts in order and did not exceed his credit limit.

"RBS strongly refutes any connotation that we have been an irresponsible lender in connection with Mr McDonald's accounts. For example, on four occasions between 2002 and 2004 we declined loans to Mr McDonald. On two occasions we suggested refinancing approaches that would have reduced his monthly outgoings including the credit card debt.

"As the BBC has not taken up our invitation to share evidence they have gathered in" conjunction with Mr McDonald's financial affairs we are unable to comment further."

Robert Jenkins had the credit limit on his Lloyds TSB platinum credit card raised from £6,000 to more than £11,000 in under two years while on an annual salary of £18,000. His wife Evelyn was lent £4,500 on her Lloyds TSB platinum card on an annual salary of £5,500.

Mr Jenkins believes he was targeted by his bank to borrow and then lent more than he could afford to repay.

The whistleblower explains that customers are invited into the bank to look at their finances, but the whistleblower says that often, in reality, it is an opportunity for the bank to cross-sell lending products.

"When you are conducting a health check you will look at areas where that person doesn't have perhaps one of the banks' products. They don't have a credit card, they don't have a loan.

"And in most cases, they probably do not need it. But, if they do not have it, you are going to try and sell it to them" the whistleblower explains.

The insider says she believes that the banks profit from those in financial difficulty.

"The most profitable customers are those that are perhaps the most vulnerable."

Commenting on Mr Jenkins case, Lloyds TSB told the BBC: "These limits and subsequent increases were offered after reviewing their joint income, their ability to repay and their external credit record."

Banks in trouble

The consequences of Britain's borrowing crisis are so serious that they are now hitting the banks themselves. They are facing a mountain of bad personal debt.

Four of the high street banks, including Lloyds TSB and RBS, have launched a new initiative to identify customers in trouble.

They will now share information on clients' incomes as well as their credit histories to inform their lending decisions.

But the whistleblower is unconvinced: "It is certainly a step in the right direction, but I do remain very sceptical.

"I really believe the banks have had all along the information they need to make decisions about whether individuals are at risk of falling into dangerous debt levels. This comes too late.

"Can the banks really change a habit of a lifetime of irresponsible lending? At the end of the day that's what has made them their profits" the whistleblower said.

At a time when the governor of the Bank of England is warning of the serious social consequences of over-indebtedness, the whistleblower gives a real insight into a culture of lend, lend, lend in Britain's banks and helps to explain why Britain has racked up record levels of personal debt.

So whats new ?

The press has been going on about the debt mountain for 5 years now !

No wonder the banks make 10 billions in profits !

I am just wondering because I do taxes and many returns have investment property rented out. 90% of them always report a loss on the rental which I am sure is because they take as many deductions as possible. But I really can't tell if owning property for rent is a good idea or if it becomes a huge head ache.Tell me about your experiences and if you recommend it to someone who makes enough and has no debt.