Lloyds TSB accused of offering unaffordable loans

People with mounting debt are being offered huge loans by banks who know they cannot afford them, a documentary will claim tonight.

Spurred on by the promise of bonuses if they reach sales targets, staff at Lloyds TSB are encouraging customers to accept vast sums of money which they cannot repay, according to the BBC programme Real Story.

And the programme alleges that much of the advice is given by staff who are not properly trained.

The programme-makers saw documents from an internal investigation by the bank which, they say, showed unaffordable loans were being offered to people.

As many as one in six large personal loans were issued despite evidence that the recipients might find it difficult to repay the debt.

The TSB Lloyds review examined 185 loans over £15,000 and, in 104 of the cases, the paperwork which was supposed to show that the correct checks on their customers' finance had been carried out, was incomplete.

In 31 of the cases, the information given "indicated that affordability was doubtful".

The audit concluded: "It is our opinion that some of the issues identified during our review have the potential to expose the bank to significant reputational risk."

Real Story, which has followed the practices of Lloyds TSB since last year, said they were contacted by both customers and employees of the bank.

Despite being assured by the bank that such practices had been stopped in 2003, the programme said employees had got in touch recently to complain that lending practices were unfair.

Real Story also criticised the bank's expensive payment protection insurance and the way in which credit cards were pushed on customers.

A spokeswoman for Lloyds TSB defended the bank and insisted they issued loans only when appropriate.

"Lloyds TSB is committed to being a responsible lender," she said. "It is clearly not in our interests to lend money to people who cannot afford to pay us back.

"We have stringent rules and controls in place. If a scenario arises whereby an individual operates outside those rules, as has been suggested, we take it extremely seriously and conduct a thorough investigation.

"We strive for very high standards in this area and are constantly monitoring our practices."

· Real Story: Bankers Behaving Badly will be screened on BBC1 at 7.30pm tonight.