Government warns
Cattles’ subsidiary against unreasonable charging
orders.

 

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The Office of Fair Trading
(OFT) has imposed a requirement on Welcome Financial Services (WFS)
not to enforce charging orders or orders of sale on customers’
homes in cases where debts – including vehicle hire purchase
outstandings – could be settled by less severe means.

The company, a subsidiary of
Cattles, has been running off its subprime motor finance portfolio
since it stopped accepting new business in the first quarter of
2009.

In a recent announcement on
plans to restructure the troubled Cattles group, executive
chairwoman Margaret Young said that some £1.1bn had been collected
from Welcome’s book of personal loans and HP agreements since early
2009.

Problems uncovered by the
OFT’s investigation into the collection procedures of Welcome, and
three other lenders, included a “failure to consider the customer’s
circumstances or proportionality before asking courts to put
charging orders in place”.

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In its guidance to Welcome,
the OFT issued the following requirement: “Welcome will ensure that
in each case where Welcome obtains a court order to repossess a
vehicle subject to a hire purchase agreement, or makes a court
application for a charging order or an order for sale, it will,
before it takes such steps, consider whether the steps it proposes
to take are proportionate, having regard to the amount of the sum
owed by the customer.”

A spokesperson from WFS
stated that the loans under investigation had not included motor
lending.

Unreasonable charging orders, repossessions and orders for
sale were criticised in one of the coalition government’s proposal
documents, ‘Our Programme for government’, which stated: “We will
provide more protection against aggressive bailiffs and
unreasonable charging orders, ensure that courts have the power to
insist that repossession is always a last resort, and ban orders
for sale on unsecured debts of less than £25,000.”