Personal finance - the small guy suffers
It is a well known fact that if you owe the bank £100, you worry. But if you owe £1,000,000, they worry!
Just last December, Bernard Madoff was arrested and charged with fraud. His scam cost banks including Santander and RBS (Royal Bank Of Scotland) between £15 million and £400 million. The scandal caused a huge outcry amongst financial gurus. Anthony Borges, Chairman of the Hedge Fund Standard Board called for 'better governance practices'. It was generally agreed that these banks had been negligent in their investments.
On the other hand, when the average person is 'negligent' in their investments or loses their job, they may fall behind on their payments. As we all know, this means you get a bad credit rating for six years (unless resolved through debtors). It does not matter if you contact the lender, because you will be penalised even if you show that you are doing everything in your power to repay them.
Most of us will need a car loan at some point in our lives. We will also likely be buying property, if not renting. But this does not mean that we are 'scatter cashes'. If you default on your payments because you are out of work, your bad credit record will affect your ability to move homes, get a car, or take up on a new job offer. It makes repaying lenders impossible, who are the ones stopping you from getting on with your life in the first place. Of course, getting finance from a high interest company is an option, but this may put you back into further financial difficulty.
Every consumer website and advice centre is crammed with people treated like criminals by high street lenders, when all they want is a little understanding and flexibility with their finances and well being . Perhaps it is time for lenders to begin differentiating between bad debtors and unfortunate ones.