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Accountants embroiled in bank lending probe

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25th Nov 2014
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Accounting firms and other professional services firms are too close to the banks, according to an investigation into bank lending practices.

Lawyer Alison Loveday told the BBC’s Panorama team in a new programme, Did the Bank Wreck My Business?, that when businesses get into trouble, there is still plenty of money to be made with the professionals who work with the banks.

“Essentially the professionals are facilitating the whole process, which can include the valuations, the lawyers, insolvency practitioners and accountants.

“And given the volume of business the banks distribute then we see they have a real stranglehold over the firms involved,” Loveday said.

The Panorama show gave an example of a car auction business in Leeds where Lloyds and PwC had been “acting in collusion”.

Keith Elliot had built the auction business from scratch, but when it ran into a cash flow problem the bank recommended PwC to help.

Elliot said the bank put forward a PwC director and at first they got on tremendously well. “Initially I was very excited and actually rang the bank to thank them for the introduction,” he said.

What he didn’t realise was PwC was acting mainly for Lloyds, and PwC’s review of Elliot’s business made for "gloomy reading", the investigation said.

Lloyds agreed to lend another £2m to keep the business going but the bank immediately ordered him to sell up.

At the same time, another part of the bank, Lloyds Development Capital, was trying to buy his business. Then three months later the bank pulled the plug and Elliot was left “without a penny”. PwC as administrators pocketed £450,000 in fees.

Elliot also later discovered that Lloyds had a stake in the auction business when it came out of administration. Elliot said: “I’ve met some guys that you really wouldn’t want to do business with, but these are the worst – these are bad guys, you really don’t want them in your life at all”

Lloyds said there was no evidence of any wrongdoing, and PwC said they rejected and refuted the claims.

The Panorama investigation gave another example of businessman Surinder Hullait who had his properties revalued by RBS. He stopped paying the interest and the properties were later sold by receivers for £1.2m

RBS said it made a loss of more than £300,000.

However after Hullait obtained some of the documentation he discovered that when he was about to go into receivership, they said they would use Colliers in Birmingham because they would likely “act quickly and take a hard approach”.

As in the previous example, the bank and professional firm denied any wrongdoing.

You can watch the programme in full on BBC iPlayer.

Replies (6)

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By JCresswellTax
26th Nov 2014 09:57

This is disgusting

As usual the big firms get to do what they want.

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By User deleted
26th Nov 2014 10:43

Yup - seen it before ...

Begbies Traynor was the accountant in that case - put in by the bank, produced report which shut down business with £1m turnover, £20k debtors & £30k creditors

All too cosy arrangement - undisclosed agenda, business mistakenly believes they are there to help - do not 'pass go' collect £xxxk fees

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Time for change
By Time for change
26th Nov 2014 10:57

Commonly regarded as...........

"The Establishment"

David John Mellor QC would be part of that group - enough said.

We mere mortals/peasants really must learn our station.

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By johnjenkins
26th Nov 2014 11:26

HSBC

used to do the same thing years ago. Although they used to do it themselves.

Good article Hugh, perhaps a follow up with more stories like this. This started getting out of hand in the recession of the eighties and nineties. How far should a bank go to protect itself so that it can lend to third world countries, which eventually gets written off etc. etc.

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Glenn Martin
By Glenn Martin
26th Nov 2014 12:40

Having Had Dealings With GRG

I know this goes on as I have  seen cases that mirror those examples in the show. The fees generated by the "consultants" involved are huge for delivering limited results for the companies.

For me the worst thing is that despite the back to back scandals that have been much publicised over the last 5 years, the banks are still allowed to behave in this way relatively un checked.

Regardless whoever is in charge of FCA or FSA before these scandals happen and no one ever goes to jail. 

I suspect that at some point soon, someone will whistle blow from within one of these organisations and hopefully some people will be accountable for what has gone. Some of the tactics employed like sending emails and letters to arrive late Friday evenings/Saturday Mornings so you cannot contact lawyers for legal advice are deplorable.

Hopefully Lawerence Tonlinson will get somewhere with his campaign as he seems to have some backing in government, although "the city" seems to be protected at all costs.

I expect the banking sector will be brought to book around the same time Lord Lucan turns up riding Shergar. 

Thanks (2)
Time for change
By Time for change
03rd Dec 2014 12:00

I'm beginning to wonder!

if someone needs pruning?

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