Lloyds is one of several lenders who admit to sending debt collection letters to customers designed to look like third-party solicitor firms.

António Horta-Osório, Lloyds’ chief executive, said that since the late 1980s the bank had used the name Sechiari Clark & Mitchell – later rebranded SCM Solicitors – to chase debts even though the lawyers were in-house at the bank.

The letter, addressed to Andrew Tyrie, chairman of the Treasury select committee (TSC), said the use of the third-party name was partly “to address those customers in financial difficulty who have not responded to our previous attempts to engage with them because they do not read or respond to bank letterhead correspondence, exacerbating the problems they face.”

In an example provided to the TSC of the letters sent by SCM Solicitors, Lloyds customers were told the law firm could take payments “on behalf of our client”. It said these would show up on bank or credit card statements as payments to Lloyds Bank.

Horta-Osario said Lloyds decided to phase out the practice in March this year as “views on transparency and clarity have changed” but it will continue to use the SCM name until the end of September.

This followed similar revelations that payday lender Wonga had enlisted similar debt collection practices.

At the FCA’s annual public meeting this morning, its CEO Martin Wheatley was asked what the regulator was doing about this issue.

Wheatley said: “We’ve asked for examples and we are in the process of collecting the evidence at the moment and we will have to look at each individual circumstance and take a judgement based on that. It varies from completely factious firms to an internal group of solicitors and so the facts are quite complex but it is something that is very live for us at the moment.”