HBoS Lending

We heard that the a senior HBoS executive was removed from his post for questioning the company lending policy, strategy, attitude to risk, etc.

An example of HBoS lending policy was given to me by one of the guys in the office who used to work for HBoS Card Services. He left shortly before Paul Moore, the so called HBoS Whistle-Blower, although I gather the two departures were not connected.

The HBoS Blue Credit Card was launched around 2003. Internally at HBoS it was called the ASBO Card as it was given to those with a zero credit rating, County Court Judgements, and little evidence of income; in short it waived all the sort of things that should be required (or not) to get a credit card.

It was a card for stupid customers.

The strategy was simple. It was a Card with a High Interest Rate and a small limit of no more than ?1000. The HBoS Blue customers would generally get the card to the limit, and not pay off the balance, either paying the interest only (minimum payment or 26% pa) or default. By the time a number of customers defaulted they had already paid back the balance in interest so even if they defaulted the card would have paid for itself. Bad debts were seen as a casualty and nothing else.

The record for maxing out the HBoS Blue card was an impressive 23 minutes after its use had been authorised.

Little wonder HBoS don?t exist any more.

Posted By: KentonCanary on February 11th 2009 at 08:40:27

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