We’ve heard all about the second wave of coronavirus, but what about a wave of defaults and fraud cases, which are expected to sweep the nation over the coming months?
That’s why the banks have called in specialist debt collectors to assist with recovering the tens of billions of pounds, that was loaned out in government backed bundles, aimed at keeping businesses afloat.
A lot of the loan recipients will have already started to default on their repayments, and #TeamCES have been raising concerns for months about the number of businesses who may have been committing fraud during these unprecedented times.
Discussions are developing around the establishment of a centralised ‘utility’ that will deal solely with the pursuit of bounce back loan repayments (or lack thereof). No small task.
Now, because these loans are government backed, you might wonder why the banks are so worried, but like everyone else, they have their own red tape to get through.
For the banks, before they can even think about going back to the government, they need to prove that they have been thorough and fair in their attempts to recover the money.
Only then can they call the government out on their 100% guarantee. We wonder how many loop holes there will be with that system, and with a looming financial crisis, could we see another banking catastrophe in the next decade?
Who will be bailing out who then?!
It’s a catch 22 for the banks in many ways, and whilst we’re not expecting to drum up any sympathy for them in saying so, if they pursue the money too fervently, they’ll be accused of bully boy tactics during a national crisis, whereas if they don’t do enough, the government could easily accuse them of not having made a significant effort to recover the money.
Yeah, OK, let’s all get our tiny violins out for the banks, but just stop for a minute to consider the sums of money we’re talking about here…
£40 billion has been loaned out by the banks, in packages of up to £50, 000, to more than 1.3 million companies.
Yikes. It’s going to be a big job, even if just a small fraction were to default or be found guilty of fraud.
We know, sadly, that it isn’t just a small fraction who will be unable to make their repayments.
For the businesses at the sharp end of this, one High Street bank executive claimed that…
“Access to a shared operational utility is a good thing to do in terms of cost efficiency. More importantly, it gives consistency for customer treatment and conduct outcomes.”
We agree that these things are important, but we also stand by our overarching message that, “if you owe it, pay it, and if it’s not yours, give it back.”