OFT takes action against Alliance & Leicester
Action has been taken against Leicester-based Alliance & Leicester Personal Finance for taking steps to have unsecured debts customers were struggling to pay secured against their homes. Three other lenders have also had requirements imposed on them by the Office of Fair Trading (OFT).
They include American Express Services Europe, HFC Bank (part of HSBC) and Welcome Financial Services, which is part of sub-prime lender Cattles. It follows concerns about the way they were enforcing some consumers' debts.
Concerns were raised over charging orders, which help lenders claim any funds left over following the sale of a customer's home after priority debts have been met, to repay the money owed. The order turns unsecured debt into a secured one so the creditor can go on to obtain a second order forcing the person to sell their property to settle their borrowings.
But the OFT said lenders had concerns over the way the orders have been used to recoup debts.
Ray Watson, the OFT's director of consumer credit, said: "Lenders are entitled to use charging orders but must do so proportionately. Where we consider the use of charging orders to be unfair or oppressive we will take action to protect consumers."
