PORTUGUESE BANKS are receiving record numbers of complaints from debtors, claiming the use of less than ethical methods to claw back owed money.
Among the alleged strong arm tactics, being used by financial institutions through debt collecting agencies, are calls to family and friends in order to shame the debtor into paying up.
Most of the complaints about banks are made to the police and to consumer group watchdogs, such as DECO, which said this week that it had received a number of calls complaining about inappropriate tactics, more in common with bailiffs and loan sharks than respected high street financial institutions.
“There have been instances of people, who have brought in proof of financial company employees exerting strong pressure on debtors so that they pay their debts quicker,” said Natália Nunes of DECO’s Debt Advice Department.
According to DECO both complainants and their witnesses claim that the degree of aggressive persuasion tactics by financial institutions is on the increase.
Both the police and DECO have confirmed that agencies acting on behalf of banks and other financial institutions use various tactics including:
• Calling up friends, family members and even neighbours explaining to them that they would like them to pass on a message that the person they know has a debt of X amount.
• Persons pretending to be from courts threatening the debtor with court action when, in fact, the person calling is from a debt collecting agency acting on behalf of a financial institution.
• Persons pretending to be bailiffs saying that if the debt isn’t paid off by X date they will seize goods amounting to the debt of the client.
While refusing to name the banks and financial institutions involved, DECO says that it has contacted the Bank of Portugal. “The Portuguese are increasingly in debt and are having great difficulties in paying them off” says the Bank of Portugal’s Statistical Bulletin.
According to the document, the number of loans and loan defaults to August 2006 reached record levels totalling 2.17 billion euros, while at the end of last year defaulted credit reached 1.98 billion euros. This works out, on average, at 217 euros of bad debt owed by every Portuguese citizen and shows, according to the Bank of Portugal, that the economic crisis is affecting many Portuguese families including, according to DECO, families with the highest incomes.
The vast majority of loans conceded in Portugal in the past few years have been mortgages.
According to the Bank of Portugal’s Statistical Bulletin this segment of loans totalled 90.53 billion euros, corresponding to 79.7 per cent of all loans granted. However, credit for holidays has also soared by 12.8 per cent this year and consumer credit has risen to 9.4 per cent in 2006.
The ease by which individuals can get credit shows little sign of slowing down despite the fact that the Central European Bank has initiated a policy of monetary restriction, which has resulted in it raising interest rates five times.