Antonio Horta-Osorio confirmed that the bank did send out threatening letters to customers in arrears that appeared to have been sent by what was a defunct solicitor firm.
In a letter to Andrew Tyrie MP, chairman of the Treasury select committee dated 15 July, the group chief executive of Lloyds Banking Group explained that the bank sent out letters under the name of Sechiari Clark & Mitchell, later renamed SCM.
The firm had been a company formed by solicitors within Lloyds Bank in the 1980s and was registered with the Solicitors Regulation Authority, but the partnership was dissolved in July 2011.
Mr Tyrie had written to four high street banks over claims they sent letters to customers that falsely appear to be from independent solicitor firms.
As well as Lloyds Mr Tyrie also wrote to HSBC, Barclays and RBS.
Lloyds confirmed it had been sending letters from SCM to customers including individuals and SMEs. It said it would stop using letters from SCM in September when necessary changes had been made to IT systems.
Lloyds said it had sent the SCM-headed letters out because some customers in arrears had not responded to bank letter-headed correspondence.
He wrote: “It is in both our and the customers interests to engage and address the financial difficult at the earlier moment. Howver we recognise that transparency is now a priority and hence the changes we’ve introduced.”
Mr Tyrie’s questioning of the high street banks follows the news that Wonga entered an agreement with the FCA, which will see it pay compensation of over £2.6m to around 45,000 customers for unfair and misleading debt collection practices.
The investigation also revealed that in some instances, Wonga also added charges to customers’ accounts to cover the administration fees associated with sending the letters.
Adviser view
Jason Witcombe, a financial planner at Evolve Financial Planning in central London said: “It is staggering how banks think they can behave like this, it is surely bordering on criminal activity. We can only wait and see what the other banks will say and whether the regulator will fine them too.”
