Worries over debt pursuit by RBS

Loan file
Image caption Courts can give lenders the power to take money from the sale of a property

A watchdog has accused RBS of being too hasty in linking customers' unpaid debts to their homes.

The Office of Fair Trading (OFT) said RBS and NatWest sought charging orders to enforce debts, which were sometimes of less than £5,000.

A charging order means the debt can be retrieved if the customer sells their home.

But the banking group said that the cases were from 2007 and 2008 and its policies had since changed.

'Last resort'

The OFT said that it found evidence that the banks were not always taking account of customers' efforts to repay debts, such as by using a debt repayment plan.

Many charging orders were used to secure relatively small amounts of debt, it found.

A charging order, obtained from a court, means that the debt must be paid from the proceeds of the sale of a home.

However, a separate order is needed for a debtor to be told that they must sell their property to pay the debt. This only happens in a minority of cases.

"Lenders are entitled to use charging orders, but they must do so proportionately and not to secure relatively small amounts of debt," said David Fisher, of the OFT.

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

In a statement, RBS said: "We are committed to helping customers who find themselves in financial difficulty.

"We changed the thresholds for using charging orders ourselves in 2008. The cases reviewed by the OFT preceded these changes. We use charging orders only as a last resort."

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