Like a thief in the night



Why do banks find it so easy to steal from their customers? Because the government allows them to do it.

In defence of that outrageous statement, here’s my evidence:

Premier Motor Auctions was a profitable company. In 2008 it employed 160 staff, had a turnover of £160 million, and sold 50,000 cars. Its chief executive, Keith Elliot, had big plans for the company and organised an overdraft of £1.75 million with Lloyds Bank. He may just as well have got into bed with the Devil.

This overdraft facility got the bank thinking. It hatched a plan. It introduced Irving Warnett to the company as a non-executive director. He worked for Price Waterhouse Cooper. He called himself a ‘critical friend’.

He scrutinised the company’s affairs, and insisted on creating a £2 million account for a DVLA contract, although there was no need to do so. There are not many medium-sized enterprises that can survive £2 million being sucked out of them, and Premier Motor Auctions was no exception.

A perfectly healthy company was in crisis because of the actions of an employee of Price Waterhouse Cooper, foisted on it by LLoyds.

Never fear, Lloyds came rushing to the rescue, and increased the overdraft facility to £3.75 million. There were strings attached. The bank insisted that the company must be sold via an administration where Price Waterhouse Cooper would act for both parties.

The company responsible for Premier Motor Auctions woes was now going to sell it.

Mr Elliot  didn’t think much of this idea. He applied to a venture capital firm, which agreed to put up the £2 million to pay off the extra borrowing.

Lloyds wasn’t going to allow its plot to be ruined. It insisted on owning 50% of the company and putting it back into administration, handled by Price Waterhouse Cooper. At the end of this process, Lloyds would buy the company for £1.

To make sure that this unpalatable situation would be accepted, the bank threatened to withdraw funding, and force the company into bankruptcy.

Mr Elliot was not going to give up. He did a deal with Scottish Motor Auctions, which agreed to put up the £2million. Things were looking up.

Not for long. Behind-the-scenes communications made it clear that the bank would not accept this arrangement. The deal fell through, and the company was bought by Scottish Motor Auctions and Lloyds. Mr Elliot was squeezed out.

Lloyds got their way. It and Scottish Motor Auctions acquired a business making £2.5 million a year. Price Waterhouse Cooper got £1.2 million in fees. Keith Elliot has nothing to do with the company, but still owes Lloyds £2 million. You can be sure that he’ll be pursued through the courts.

Mr Elliot approached his MP, Austin Mitchell, who thought that the behaviour of Lloyds and Price Waterhouse Cooper was less than perfectly ethical. He obtained a Parliamentary debate. He described the case more powerfully and eloquently than I have done. You can read the text in the ‘Related Posts’ below.

What was the response of the Government’s representative? “I do not have the power to intervene in individual insolvencies”.

I’m not making a party-political point here. Mr Mitchell is a Labour MP, and the Government is a Conservative-Liberal coalition, but I’ve no doubt that a Government of any colour would be equally craven.

It’s easy to see why. The immoral behaviour of the banks and their stable-mates is so widespread, and the total of individuals’ losses is so massive, that it’s impossible to put things right. The country could not afford it.

Some victims have managed to obtain redress by organising themselves into lobby groups and embarrassing the regulators. Their success should be applauded, but they are a small proportion of the total. Most people who have suffered substantial financial damage because of banks’ high-handed attitudes and dubious practices have no choice but to lick their wounds and get over it.

Justice does not appear in the banking lexicon.


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4 thoughts on “Like a thief in the night

  1. Caroline Barwick

    Another great post which I have shared. Agree, the only way forward appears to be by embarrassing those concerned or going to the police. However, if my own case is any measure, taking the banks to task is far from straight forward whatever the route and favorable results for the victims remain few and far between.

    1. banxbane Post author

      Thanks, Caroline, and thanks for sharing. Yes, it’s difficult to make any headway if you’re acting as an individual. The usual rules of legality and decency don’t seem to apply. You can feel as if you’re up against the whole establishment. That’s why it’s so important to support each other when we can. Good luck in your fight.

  2. Rowan Bosworth-Davies

    I wonder how many times Lloyds and PWC have conspired (for that is what it is – an on-going conspiracy to defraud) other clients in the same way.Is there any way others who have been damaged in similar ways by these entities could be encouraged to come forward and tell their tale,because if there is a substantial degree of similarity of ‘method’ in the techniques adopted (and there will be, of that I am certain), then it might be possible to get the police to consider an investigation for just such a case – conspiracy to defraud. It would take a brave Fraud Squad, and some skilled detectives, but it might not be impossible. It would have gone through during my time at the Fraud Squad, in the 1970s/80s, but these days, the police are so much more politically controlled and their actions determined by other agencies, that it might be that the relevant force might not wish to take the case.

    1. banxbane Post author

      You’re right. So often, customers feel that their bank’s behaviour has been criminal, but they can get no-one to listen to them.

      A group of small businesses has come together as ‘Bully Banks’, and is having some success with politicians and the regulators, but I’ll bet that most of them would prefer a criminal prosecution:


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