Crunch victims use anti-stalking laws to challenge 'greedy' banks

Lawyer seeks injunctions to stop debtors facing daily phone calls from bank agents

(John Lawrence)

Anti-stalking laws are being successfully used by people hit by the credit crunch to stop demands for payment from their banks, The Independent has learnt.

The laws, originally designed to protect the victims of domestic abuse from harassment, allow judges to grant an injunction, preventing a defendant from making excessive phone calls. However, the Protection from Harassment Act, introduced in 1997, has been used by solicitors as part of as many as 20 cases against banks, who hire collection agencies to chase debtors. In each case, the banks involved have either undertaken to reduce calls or an injunction has been granted, ordering them to stop. Andrew Gallen, the solicitor who has been using the tactic since the Spring, said he did so to give his clients some breathing space. Banks are instructed to make all demands for payment through their debtor's solicitor once an injunction is granted. They could face fines if they fail to put a stop to excessive calling.

"We started issuing some injunctions after some clients continued to receive a high number of calls," he said. "Rules on chasing debts are quite clear that there should be gaps between calls. This is another way to try to force them to give clients some space. There seems to be a feeling of whoever shouts loudest gets paid first."

Mr Gallen argued that he was not using the law simply to stop banks reclaiming outstanding debts. "We only attempt to use the harassment law if the client is receiving two calls a day or more," he said. In September, he will also begin an attempt to win some clients damages of as much as £3,000 from banks accused of harassment.

The latest case in which he has sought an injunction is that of Daniel and Shantina Niles. The couple, from Surrey, were forced into debt after their bank put their chain of care homes into administration in 2007, though they claim the company was still making £500,000 a year. Having run the homes for more than 20 years, they suddenly had no income. "It made us very angry to lose the business that was still profitable – we felt it was very unfair," said Mr Niles.

Once in debt, a number of their creditors began to phone them regularly. They say that at its height, they were receiving four or more calls a day, from 8am onwards. "They were calling all the time," Mrs Niles said. "I'm angry we have been put in this position having run a good company. We've had to re-mortgage and borrow money as a result. These calls are the last thing we need."

The Independent was prevented from reporting on the hearing at Kingston-upon-Thames county court yesterday. The district judge, Mark Stewart, ruled that the proceedings had to be held in private after all three banks involved in the case, RBS, Barclays and MBNA said they did not want the media present. The judge is due to reach a decision on the case next week.

Francis Walker, from the Consumer Credit Counselling Service, said that bombarding a debtor with phone calls could ultimately be counterproductive. "Debt is not just a financial problem, it is a psychological problem, and fielding a high number of phone calls can be depressing and does not help," she said. "Creditors are entitled to demand what they are owed, but that should not mean embarrassing people in this way. There are also clear rules allowing people breathing space."

All three banks concerned declined to comment on the case.