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MSE News: NatWest and RBS warned over debt chasing methods

in Loans
20 replies 4.8K views
"RBS and NatWest have today been warned by the OFT not to unfairly use 'charging orders' on homes to collect debt..."


  • fermifermi Forumite
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    The actual press release.
    The OFT has imposed requirements on Royal Bank of Scotland plc (RBS) and National Westminster Bank plc (NatWest), both members of the RBS Group, to address concerns about the way some customer debts are enforced via charging orders.

    A charging order is a court order that places a 'charge' on a debtor's property, turning unpaid, unsecured judgment debts into secured debts. This means that once any prior ranking charges on the property have been settled, the debt must be paid back out of the available proceeds of sale when the debtor sells the property. A bank or other creditor which has obtained a charging order can also apply to the court for an order requiring the property to be sold, but this happens only in a minority of cases.

    Charging orders are a legitimate way to secure and ultimately recoup unpaid debts. However, an investigation by the OFT concluded that there were problems with the way RBS and NatWest were using them.

    The OFT's concerns included an apparent failure by the banks to consider customers' financial circumstances and the proportionality of the approach before asking the court to put a charging order in place. For example, the OFT found evidence that the banks were not always taking account of customers' efforts to repay debts using a debt repayment plan or other method, and that many charging orders were used to secure relatively small amounts of debt, sometimes below £5,000.

    The requirements imposed reflect proposals made by the two banks.

    David Fisher, OFT Director of Consumer Credit, said:
    'Lenders are entitled to use charging orders but they must do so proportionately and not to secure relatively small amounts of debt.

    'Where we consider the use of charging orders to be unfair or oppressive we will take action to protect consumers.'

    1. Download the requirements imposed on each bank:

      Royal Bank of Scotland plc (pdf 79kb)
      National Westminster Bank plc (pdf 81kb)
    2. The OFT is not able to resolve individual complaints by consumers on credit products, although it welcomes information from consumers to help it decide where to focus enforcement activities. Individual consumers with complaints about credit matters should, in the first instance, address these to the business concerned itself and then, if unresolved, to the Financial Ombudsman Services (
    3. A charging order is one of a number of enforcement methods available to creditors to ensure that judgment debts are satisfied. A charging order can only be applied for where a court judgment has already determined that a debtor owes money to the creditor, and payment under that judgment is not forthcoming.
    4. Charging orders do not require debtors to sell their property. However, the creditor can make a further application to the court requesting that an order should be granted to enable the property to be sold sooner to repay the debt. This is called an 'order for sale'. Such orders only tend to be granted in a small proportion of cases.
    5. Under the Consumer Credit Act 1974 (CCA), businesses that offer goods or services on credit or lend money or are involved in activities relating to credit or hire must be licensed by the OFT. The OFT has a duty to protect the interests of consumers by monitoring the fitness of those holding or applying for licences.
    6. Under the CCA, where it is dissatisfied with any matter in connection with a business, a proposal to carry on a business or any other conduct by a licensee, associate or former associate, the OFT may impose requirements on the licensee. Prior to imposing requirements, in the absence of a suitable proposal by licensee (see below), the OFT must, amongst other things, issue a minded to impose requirements notice to the licensee.
    7. Alternatively a licensee may make a proposal to address the OFT's dissatisfaction pursuant to section 33D(4) of the CAA. In these circumstances the OFT is not required to issue a notice that it is minded to impose requirements provided its determination is in the same terms as the proposal made by the licensee. This was the process followed by RBS and NatWest.
    8. A breach of a requirement can lead to a maximum fine of £50,000 per breach and/or be grounds for revocation of a consumer credit licence.
    9. The OFT imposed requirements in 2010 on Alliance and Leicester Personal Finance Limited, American Express Services Europe Limited, HFC Bank Limited (part of the HSBC Group) and Welcome Financial Services Limited (part of Cattles plc) to address concerns about the use of charging orders.
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  • Banks should make it abundantly clear that your unsecured credit card debt can be turned into secured debt if you fall into financial hardship!
    They should also be limited to the amount of interest they can charge customers if they have the right to turn unsecured debt into secured lending.
    I do not know anyone who would be prepared to pay 30 odd% APR and put there home at risk, if they want to charge extortionate rates of interest then they cannot secure the debt on someone's home.
    They cannot have it both ways.
  • NorthernOneNorthernOne Forumite
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    Part of the Furniture Combo Breaker
    I can see the banks then selling these charging orders onto other financial institutions as guaranteed debt recovery for less than the actual debt

    Nothing banks do nowadays even remotely shocks me anymore.
  • Hi does this mean you can challenge one as.i believe mine was very unfair under the circumstances i.was in on maternity leave from work never missed any payments, told then everything! And get landed with that thanks
  • bigadajbigadaj Forumite
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    Alternatively debt is debt, and if you can't afford to repay it don't take the debt in the first place, as there's no reason why a creditor shouldn't look at getting debt from someone who has assets.
  • Hi i had the same circumstances with Natwest, my husband was off wrk for 12 weeks with a prolapsed disc etc, we took insurance to cover every eventuality, he was also diagnosed with depression and on medication, our finances dropped and we made the bank aware from day one in relation to our mortgage etc and our other creditors, we had a unsecured loan with Natwest and could not keep up the full amount, we advised them and made offers of reduced payments, etc but they would not accept anything and kept loading on charges, in the end considering we had never had any credit problems and been their customers for over 25 years etc, they would not budge or help and went straight for a charging order, i appealed to the judge and made him fully aware of the situation but he just granted the order! and now we have that hanging over us, we ended up taking advice from Payplan company who are free and work with many associations, and they sorted a debt management plan for us,but now with the order it has been made a priority debt which if they felt the need to they could make us sell the house etc, Payplan were shocked that Natwest would not consider any other means or our offers, there must be some recompence in these situations. we have never defaulted on anything.
  • bigadaj wrote: »
    Alternatively debt is debt, and if you can't afford to repay it don't take the debt in the first place, as there's no reason why a creditor shouldn't look at getting debt from someone who has assets.

    yes debt is debt, but who can say what unforseen circumstances can arise! we could easily afford our outgoings, but how were we to know an accident would happen and depression set it which even though we had so called cover, when it came down to the wire of using it for this event so to speak, we found the insurance to be worthless and too many exceptions that we could not claim or use it, wasnt worth the paper it was written on.
  • Mrs_RyanMrs_Ryan Forumite
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    bigadaj wrote: »
    Alternatively debt is debt, and if you can't afford to repay it don't take the debt in the first place, as there's no reason why a creditor shouldn't look at getting debt from someone who has assets.

    Oh so everyone should have a crystal ball, should they?? I couldnt foresee being diagnosed with cancer when I took out my accounts that went into debt (one of them was with NatWest and yes they are a nasty bunch)

    Idiotic posts like yours dont help...
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  • bigadajbigadaj Forumite
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    No, just mange finances responsibly, I've also had cancer but managed to ensure I wasn't massively in debt.
  • bigadaj wrote: »
    alternatively debt is debt, and if you can't afford to repay it don't take the debt in the first place, as there's no reason why a creditor shouldn't look at getting debt from someone who has assets.
    may i remind you this is a helpful site not a sarcastic one so please try and engage brain before opening mouth,,,,,, as someone said they don't have a crystal ball
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