The Honourable Banking Blue Star Awards We would like to warmly invite all retail banks and building societies to compete against each other in the annual Honourable Banking Blue Star Awards. Banks and building societies will be judged and given a blue star rating (1 to 5 rating; 1 star for poor and 5 stars for excellent) for each of the following categories:

Each bank's or building society's performance in protecting vulnerable people (please see our recommendations below). The truthfulness of each bank's or building society's corporate and social responsibility statements as well as each bank's overall performance in meeting any claims and / or promises. The transparency and consumer-friendliness of their products and the information they use to promote and market these. Each bank's or building society's overall treatment of its employees. Social objectives achievements and ethical investment. Each bank's or building society's compliance with the spirit of the law as opposed to just the letter of the law.

Letter to Vince Cable (BIS), via MP Responses to letters resent via MP Update on letters. Letters resent via MP Letter to HM Treasury: consumer credit law

The example set by senior management in terms of honourable behaviour. This will include the efforts of each bank's and building society's senior management to lead the way by personally withdrawing from the soulless competition with their peers for ever bigger remuneration packages and bonuses. (Investigations into the 2008 banking crisis have revealed a strong link between excessive remuneration and excessive risk taking, which can prove very costly to society)

Every year two prestigious awards will be offered for the following:

The overall strongest performing bank according to the above categories.

The most successful and innovative social objectives maximiser.

For a powerful example of how banking can be used to maximise social objectives please click here.

The awards will be held annually in London and will be judged by an independent panel of experts. More details will be provided at a later date. It is our sincere hope that these awards and ratings will provide those in charge of banks or building societies with a means and incentive to run their banks or building societies in a way that allows them to stand shoulder-to-shoulder with the common person in the street; the very people who provide them with much of the business that pays their salaries and dividends. It is hoped this will help restore much needed public confidence and trust in banks and building societies.

Our recommendations to protect vulnerable people

Based on a thorough review of anti-social banking practises we have come up with a list of recommendations to protect vulnerable people. Most of these recommendations are set to become Office of Fair Trading (OFT) requirements to maintain fitness to hold consumer credit licenses. These requirements came into effect on the 1st of February 2011. Recommendations in green font represent initiatives we proposed to the OFT for inclusion in their requirements.


Home repossession

Banks and building societies would agree to only seek the repossession of homes of people who default on their mortgage payments as an absolute last resort after all other reasonable alternative arrangements have been exhausted. Any families with children who live in a property that has been repossessed would only be evicted after alternative, long-term accommodation has been arranged. This would also apply to the homes of elderly people and any people considered to be 'vulnerable adults' under the Care Standards Act 2000, section 80(6). Bed and breakfasts and hotel rooms would obviously not suffice for alternative long-term accommodation. The purpose of this initiative is to help lenders understand that they are dealing with real people and real families rather than just names and numbers on a report. This is particularly important for protecting children who face great upheaval and stress in their lives because of adult decisions and actions, which they have no power to influence. We also want lenders to recognise that even though it is the responsibility of local authorities to re-home families and vulnerable people in financial hardship it is irresponsible to over-burden those local authorities unnecessarily. This is especially the case if they are already struggling to cope with high demand from other vulnerable and needy people for their services. It is clearly not in the interests of society for lenders to take local authorities and housing services for granted.

Banks and building societies would restrict the use of charging orders and 'order of sale' orders to borrowers who refuse to make repayments, and not those who cannot make repayments due to financial hardship or physical or mental incapacity. Similarly, they would refrain from knowingly selling on bad and doubtful debt to third-party-debt-collection firms who engage in such unethical and socially destructive practices.

All credit / debit cards would have default limits applied to them so that cardholders can't physically withdraw from cash machines any more than the amount of money they actually have in their account; or if they have overdrafts and / or credit facilities; they can withdraw no more than their agreed credit limits to prevent any need for penalty charges arising. Unauthorised borrowing or 'informal debt arrangements' that give rise to significant new debt and charges will be at odds with OFT guidelines for responsible lending, especially concerning vulnerable people. .

Banks and building societies would agree to invest in implementing technology that prevents unauthorised borrowing from point-of-sale facilities such as retail stores etc.

Penalty charges for failed direct-debits, standing orders and bounced cheques should reflect the true costs to banks or building societies in line with the spirit of current regulations on unfair terms in consumer contracts.

Going forward banks and building societies would agree to only approve credit applications after customers have supplied reasonable evidence of their income and expenditure to prove they actually have the means to repay their loans. Where this basic check is not carried out and a customer is later unable to meet the repayments the loan must be written off. This recommendation is meant to provide quick redress for vulnerable people independently of whether the worthiness of a lender’s credit licence is called into question or not. That maybe more helpful in cases where a rogue salesperson, for instance, acts outside their employer’s policy and guidelines for personal gain.

Banks and building societies would immediately cease the practise of unsolicited increases in credit limits on credit cards and the unsolicited issuing of credit card cheques (the use of credit card cheques is likely to be greatly restricted if clause 27 of the Financial Service Bill is passed).

Where a debt is owed to a bank or building society they would cease to use their 'right of set-off' to take money from a customer's basic account or current account to pay the debt without first checking the customer's circumstances and giving them seven days advance warning. They would agree not to use their right of set-off with people in financial hardship. If a lender phones a borrower to find out their circumstances before they take a decision whether to offset or not, there is always the very real possibility that the borrower will be under considerable stress and they may forget to pass on important information. A week’s notice should give the borrower sufficient time to assess their circumstances more objectively. That would also give them the chance to properly inform the lender in writing of their circumstances and reduce the likelihood of the lender taking any snap, ill-advised decisions to offset without all the facts. If people in financial difficulties are not given this advance warning then there may be a risk that money that they expect to be available for necessities like rent and food, is suddenly made unavailable. In some cases landlords may react to missed rent payments by issuing a notice of eviction, thus putting such people at risk of homelessness. By giving at least seven days notice a person in financial difficulties should have at least some time to make whatever emergency arrangements are necessary to keep food on the table and a roof over their head. This is obviously even more vital if the borrower has dependents.

Banks and building societies would agree to consult with social welfare organisations and consumer protection organisations when considering the social costs of their banking policy decisions that affect wider public. No-one expects banks' and building societies' senior managers and policy leaders to have the expertise of social workers when designing new policies and products that may have anti-social consequences. But it can do no harm for them to consult social welfare organisations and consumer protection organisations that do have expertise in assessing the potential social costs of new products and practises. For instance, penalty charges make good financial sense to banks and building societies as an easy revenue stream. Few of them would understand how penalty charges impact the vulnerable. (Please see below)

If a consumer protection organisation or social welfare charity raises serious questions about the impact of a bank’s or building society’s policies or actions with regard to the possibility of potential harm being done to the public - especially vulnerable people - then the bank or building society must undertake a serious and timely review of the matter with the outcome being reported directly to senior management, the organisation concerned and the Office of Fair Trading.

Our society is full of people who live in poverty and struggle each day to feed themselves and their families. Banks and building societies who helped lead such people further into debt through reckless lending; or who continue to use penalty charges for profit; or who resort to aggressive collection methods including aggressive home repossessions and so on, need to be more aware of the potential consequences. These may include family break down, domestic violence, substance abuse, physical and mental health problems and suicide to name but a few. Are these things really what banks and building societies want to invest in or contribute to? Isn't it time they explored new and better ways of operating without being forced to by regulators? People aren't just names and numbers on reports and any bank or building society that realises this and operates accordingly would soon be much appreciated and admired.

How penalty charges (or informal borrowing charges as they are now often being called) help drive poverty and the lessons that can be learned from it

Consider a senior citizen on the current state pension who has had a stroke and has difficulty managing his or her finances, which causes him or her to accidentally overdraw their account. Do they need numerous £30+ penalty charges reducing the little money they have to survive off? If they are fortunate, they may have someone who is concerned with their welfare, discovers the accident and raises the issue with the bank or building society before it surprises the senior citizen and causes them considerable stress. Is it really a good idea for banks or building societies to take a gamble with the welfare of such vulnerable people?

Let us next look at mental health sufferers. Consider a person who has a sudden, serious mental-health breakdown. That person may take more money out of their account than they have in it, completely unaware of the ramifications of this. When they recover a delicate grip on their sanity, do they then need a bank or building society trying to recover the money from them and much more on top?

Finally, consider the person who is unemployed and struggling to get by. Do they really need the temptation of easy overdraft money through unauthorised borrowing they can easily take, whilst blocking the full consequences out of their minds. Recovering that money plus substantial charges on top is only going to place more pressure on someone who already has enough to deal with. Let us not be under any illusion as to what can happen next. If you heap enough pressure on some individuals, they can blow their fuse and take out their problems on the softest targets they know; their partners and children— sometimes even resulting is serious cases of domestic violence. To some families, acute financial pressures lead to marriage breakdowns, family break-ups and even suicides. Some people suffer serious physical health problems from the stress of financial problems, whilst others take to substance abuse in a bid to gain relief.

We would urge banks and building societies to urgently and honestly weigh up these issues for themselves. If they would only judge these issues in line with the often noble sentiments and ideals expressed in their own corporate and social responsibility statements, a vital lesson could be learned and they could move forward the stronger for it.