Lloyds TSB pays compensation after lending dementia patient £18,000

A Lloyds TSB branch sign Lloyds TSB lent a dementia patient £18,000 in 2010 which remained in a bank account, unspent

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Lloyds TSB has agreed to pay compensation after lending a woman with dementia £18,000 for home improvements.

The bank allowed pensioner Jean Hyde to borrow the money in 2010, even though the repayments took almost half her income.

Her family told Radio 4's Money Box programme she would not have understood what she was agreeing to when signing-up for the loan.

After Mrs Hyde died in 2011 the £18,000 was found, unspent, in her account.

Lloyds Banking Group told the BBC it did not realise Mrs Hyde had dementia but admitted it should not have lent her such a sum considering her total income was only around £15,500 a year, including her state pension.

However, when she went into the Cirencester branch of Lloyds TSB in January 2010 her request for an £18,000 loan for home improvements was agreed, even though she was a tenant not a homeowner.

Start Quote

This [loan was made] less than one year before she was literally taken away by the men in white coats to a secure psychiatric unit”

End Quote Roger Hyde Son of dementia patient

Lloyds told Mrs Hyde's family it does incentivise staff to sell products but would not disclose how much this particular loan earned the employee who sold it to her.

Since her death Mrs Hyde's son Roger and daughter Alex have tried, without much success, to find out more about the circumstances in which their mother was lent the money.

When told of the case, Andrew Chidgey of the Alzheimer's Society said:

"This is a tragic set of circumstances. But we hear all the time about instances where people are taking out loans or going into the bank and drawing out large amounts of money.

"We need to get much better at helping people with dementia and their families to cope with financial difficulties like this."

Compensation

Before taking out the loan, Mrs Hyde had suffered with mental illness for some time - her driving licence had been revoked and local psychiatric services were aware of her condition.

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Elderly man with dementia

Hear the full report on Radio 4's Money Box on Saturday, 9 June at 12:00 BST or download the podcast

Lloyds says Mrs Hyde initiated the loan request herself: "We were not aware of her dementia when she applied for her loan and processed her application in the normal way".

But her son Roger Hyde says for Lloyds to say it was unaware of her mental fragility is very hard to believe:

"She was frequently ejected from shops for violent behaviour.

"This [loan was made] less than one year before she was literally taken away by the men in white coats to a secure psychiatric unit."

As executor of her estate Mr Hyde says the loan was unreasonably high considering his mother's income and circumstances. He estimates her monthly income at £1,280 when the loan was made.

Her records show monthly outgoings for rent, council tax, and insurance of £400.

Mr Hyde estimates his mother needed another £250 to pay for utilities and food. The £583 loan repayment took up almost all the rest of her income.

Lloyds has subsequently admitted that it did not look thoroughly at Mrs Hyde's outgoings when she was assessed, saying "if we had taken this into account we would not have allowed her to borrow £18,000."

However, Lloyds also said it would have been acceptable to lend Mrs Hyde around £14,500.

Lloyds has now agreed to waive the interest and loan charges paid on the loan - amounting to £1,718 - and pay her family £450 in compensation and a contribution to the costs of winding up her estate.

But Roger Hyde says he wants Lloyds TSB to pay the £4,000 he has so far spent on legal fees which would not have been necessary if he had not had to deal with the complexities of the loan - his mother's net estate totals no more than £22,000.

In a letter sent to Lloyds TSB this week, Mr Hyde said: "I am determined that this affair need not cost me or my family a penny and that includes the legal fees we've incurred."

Lloyds has still to reply to that letter.

Money Box is broadcast on Saturdays at 12:00 BST on BBC Radio 4 and repeated on Sundays at 21:00 BST. You can listen again via the BBC iPlayer or by downloading Money Box podcast.

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