ROYAL Bank of Scotland has secretly changed customers’ accounts into personal loans with up to 80% interest, generating debts of as much as £100,000, an investigation has revealed.

The bank, which was effectively nationalised 10 days ago, has admitted that its debt collection branch drew up new loan agreements and accounts for customers without their consent. MPs this weekend questioned whether the scheme was legal.

Duncan and Debbie Birch from Torrington, Devon, say their £24,100 overdraft ballooned into a debt of £100,000 when new loan accounts were created without their permission.

Documents show that at one point the couple were being charged an interest rate of 80%, although the bank claims this was rectified. Yet the couple say it has now obtained a legal charge of £70,000 on their home.

Another customer, Paul

Walton, 41, from Rotherham, South Yorkshire, found loan documents drawn up in his name for new accounts. “They were fabricated and there was interest accumulating in the accounts,” he said.

The bank claims the new loan accounts were created “purely” for administration and that it was never intended that the debts should be collected. They were unable to

explain exactly what the purpose of the “administrative accounts” was, why they had created them and how many customers were affected.

John Healey, a former Treasury minister and Walton’s MP, said the situation was “deeply disturbing”.

“The system does not appear tight enough to prevent [these accounts] becoming the basis of real debt demands and court action,” he said.

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