Debt advisers accuse bank of being too quick to repossessPhillip Inman The Guardian Monday November 19 2007
Debt campaigners challenged Northern Rock yesterday to soften its line with mortgage customers who fall into arrears after they claimed the bank was one of the most aggressive on the high street for repossessing borrowers' homes.

The stricken bank refuses to negotiate with borrowers who are unable to make monthly repayments and moves quickly to gain control of their properties rather than allow arrears to build up.

The Consumer Credit Counselling Service, which handles thousands of debt enquiries a week, said feedback from debt counsellors showed the bank was one of the most aggressive lenders dealing with customers unable to pay their bills.

Northern Rock has often stressed the strength of its loan book and its low arrears figures. It has maintained its figures for arrears of more than three months at about 0.4% of its customers, compared with an industry average of 0.8%.

The CCCS said Northern Rock refused to accept debt-management plans and routinely rejected individual voluntary arrangements, a five year repayment scheme. It is understood that the bank often offers customers further loans to repay debts over a longer period, though the bank denied this was a policy.

Malcolm Hurlston, CCCS chairman, said: "Northern Rock is one of the least charitable on the high street. It says borrowers are treated fairly, but that simply doesn't fit with our experience."

He said the bank's Together product, which combines a mortgage with a personal loan of up to 125% of the property value, was at the root of many repossessions. "The ramifications of the Together loan are felt by many customers," he said. "It blurs the line between secured and unsecured lending to the detriment of the borrower."

In many cases the customers will attempt to protect their mortgage and stay solvent by cutting back on personal loan repayments. Defaults on unsecured personal loans cannot trigger repossession orders but must be pursued through the courts.

However, the bank can apply a charge on a home to the value of the personal loan, in effect securing the entire loan against the customer's property.

Northern Rock denied that it dealt harshly with borrowers in arrears. A spokesman said the bank was well known for allowing miners to keep their homes during the miners' strike of the early 1980s and that policy persisted today


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