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UK banks 'carrying out secret checks on customers'

Banks in the UK have admitted to carrying out secret checks on customers they deem to be high-risk.

Around 2,000 people who bank with Northern Rock Asset Management and Bradford and Bingley are being telephoned a week, with the institutes warning them that they could risk losing their homes if they do not reduce their spending.

Individuals are being advised to limit expenditure on costs that are considered luxuries - such as mobile phones and gym membership - and to focus on settling their mortgage arrears.

Around 30,000 customers are expected to be contacted in total and the action could influence other banks to follow suit.

Richard Banks, chief executive of UK Asset Resolution - the company that runs Northern Rock Asset Management and Bradford and Bingley and is not regulated by the Financial Services Authority - said: "Some people won’t cope when interest rates rise, but for others there are remedies. They need to think about what is their most important debt."

By Gary Cooper