This is part of my explanation in my report how I survived & then started taking my ex 'friends' at the banks on to protect maligned SME's...
My introduction to the weaponisation of insolvency came in 2008/09 when I became a victim of lending fraud at Barclays Bank through two small property development companies that I co-owned. Ironically, I had previously worked for Barclays as a financial adviser.
The relationship manager, whom I will call Mr K, repeatedly assured me in early 2007 that funding applications for the purchase and development of two properties had been submitted, approved and were "good to go". In reality, no applications had been made to Barclays' credit team. While funding was provided for the property purchases, the promised development finance never materialised, leaving me servicing loans on two empty buildings and under growing financial pressure as we headed towards the financial crisis in 2008.
When I challenged Barclays, the issue quickly ceased to be about the bank's conduct and became a question of survival. Senior staff attended my office and made it clear they were prepared to place my companies into administration, as they had already done with other affected customers. I replied that I was not an idiot and no court would believe I had knowingly purchased more than 10,000 square feet of property simply to leave it undeveloped and informed them that I intended to sue the bank.
The local Barclays Director then put his head in his hands and said: "Steve, you would win. We have companies going bust all over Hull — it's such a mess we've had to put a whole team on it."
I later learned that Mr K had been using his lending authority to approve transactions without properly disclosing their purpose to the credit team to meet his sales targets. According to the manager who later inherited his portfolio, Barclays' response was not to compensate affected customers but to make Mr K reconstruct the credit files retrospectively, presenting lending as though it had been properly approved before quietly moving him on.
That experience taught me a lesson I would encounter repeatedly over the years. Once serious allegations are raised against a large financial institution, the dispute can quickly shift from the conduct of the bank to the survival of the customer. It was my first real glimpse of how insolvency and the threat of insolvency can be used to contain complaints, manage reputational risk and place victims under immense pressure to settle.
The deception caused me substantial financial loss, delays and pressure that I would not otherwise have faced. Barclays having admitted Mr K’s dishonesty to me, eventually agreed to support the two small developments in 2009, when no other lenders would have done so. Most of Mr K’s other victims however, had already lost their businesses and livelihoods.
The consequences were for me were still severe. My losses ran well into six figures, larger developments had to be abandoned or restructured, and the prolonged stress ultimately caused me to collapse and undergo extensive medical investigations. While I eventually recovered, albeit with some long term effects, the episode demonstrated how financial misconduct can inflict damage far beyond the balance sheet.
Not all the victims were so fortunate. One, whom I shall refer to as David M, was a well-known local businessman. After his companies were pushed into administration following the same unauthorised lending and false promises of funding by Mr K, Barclays and its appointed administrators then pursued his personal assets under a personal guarantee.
As the pressure on David increased, I assisted him informally, despite the obvious risks of doing so while I still banked and held mortgages with Barclays. Because he was a prominent figure in the local business community, his continuing complaints were causing the bank reputational difficulties.
In June 2010, my solicitor telephoned to warn me about a conversation that had taken place at a solicitors' lunch. A well-known local solicitor had stated that the administrators, in his own words, acting on Barclays' instructions, had placed “£60,000 on his desk” and told him to “take out” David M. He had joked that he “didn’t know whether to take his penthouse in Marbella first or his Bentley.”
Still having contacts within Barclays, I emailed a member of the Board and made it clear that public exposure of what had happened would reflect badly on the bank. Within weeks, David and I were in a meeting in Leeds with senior Barclays executives, including the Regional Director, who had just returned from discussions with the Board and had been instructed to "get a deal done."
Barclays were represented by their lead General Counsel for the UK and Europe, Mr C, together with their solicitors. David and I attended alone. Three hours later, a substantial settlement had been agreed and a Non-Disclosure Agreement signed.
What began as a dispute involving one dishonest bank manager gradually revealed a much wider pattern. When victims of bank misconduct fight back — particularly when they have evidence and are prepared to litigate or go public — the response often escalates. I had experienced the threat of administration myself and had also seen how insolvency processes could be used against other victims. More strikingly, I saw how determined institutions could be to prevent those practices from being exposed.