Activists demand Household inquiry

A US civil rights group opposed to HSBC's planned £9bn takeover of American finance firm Household International has written to independent directors of the UK-listed bank asking them to investigate a range of alleged sharp practice at Household.

The letter from Inner City Press, an activist group based in New York, claims Household's practices are "unsafe, unsound and predatory".

It has been faxed to HSBC's 13 non-executive directors, including the bank's deputy chairman Sir Brian Moffat, who is also chairman of Corus; and Lord Marshall, who is chairman of both British Airways and Invensys.

The letter urges the bank's non-executive directors to investigate a host of lending practices at Household, including bonus payments to sales staff who recruit borrowers with loan payments that are already months in arrears.

It also urges independent directors to form an action committee to deal with reports of sharp practice.

Last year Household agreed to pay a $484m settlement relating to accusations that it had used overly aggressive sales practices on real estate loans in the late 1990s.

HSBC has played down suggestions that Household would make an unsuitable partner. A bank spokesperson said yesterday: "We support the commitment Household made [at the time of the $484m settlement] to comply with best practices." She added that HSBC was aware of all allegations that had been made.

Inner City accuses Household of predatory behaviour, targeting low or middle-income borrowers with high cost loans.

It has accused HSBC of discriminating against ethnic minority borrowers, claiming that African Americans were 2.7 times more likely to have applications for mortgage refinance loans refused than white customers. Hispanic customers are said to be denied 2.3 times more frequently than white customers.