The Press Association: OFT acts on debt recovery measures: "Action has been taken against four lenders that took steps to have unsecured debts customers were struggling to pay secured against their homes.
The Office of Fair Trading (OFT) has imposed requirements on Alliance & Leicester Personal Finance, American Express Services Europe, HFC Bank, part of HSBC, and Welcome Financial Services, which is part of sub-prime lender Cattles, following concerns about the way they were enforcing some consumers' debts.
The problems centred around the use of charging orders, which enable lenders to claim any funds left over following the sale of a customer's home, after priority debts - such as a mortgage - have been met, to repay the money they are owed.
The order effectively turns an unsecured debt into a secured one, and the creditor can go on to obtain a second order forcing the person to sell their property to settle their borrowings, although this only happens in a small number of cases.
The OFT said that although charging orders were a legitimate way for creditors to recoup unpaid debts, it had found problems with the way some lenders were using them. The problems were different for each business, but included cases where a charging order had been obtained on debts of less than £600."
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