Independent Banking Advisory Service 

Mortgage Shortfall Debt Claims - OFT Complaint by IBAS

What does the IBAS complaint to the Office of Fair Trading (OFT) against Bradford & Bingley really mean?

The OFT welcome feedback from individuals but it "has no legal powers to become involved in individual disputes" and cannot help individuals "directly" with a complaint. For that reason we made a complaint ‘collectively’ on behalf of our members who had been or were customers of Bradford and Bingley or their subsidiaries.

We provided the OFT with a portfolio of cases reflecting core issues in the complaint which alleged:

• Unfair, improper and oppressive debt collection tactics by Bradford and Bingley and their agents in the pursuit of the recovery of alleged mortgage shortfall debt resulting from past home repossessions - as is outlined by the OFT  in Section 2.5 (OFT611).
• Physical/psychological harassment by Bradford and Bingley and their agents on mortgage shortfall debtors - as  is outlined by the OFT in Section 2.5 (OFT611).
• Unreasonable and unrealistic demands and pressure for increased sums of money despite knowledge and proof of an inability to raise further monies or release equity - as is outlined by the OFT in Section 2.5 (d) (OFT 611).

The OFT invited IBAS to submit further cases with additional information and have issued case forms to IBAS for those included in the original portfolio of cases and for those cases in the supplementary portfolio that is now being drawn together so that these complaints can be considered and properly investigated by the OFT.

It should be noted that when referring to B & B, Mortgage Express who as a "wholly owned subsidiary of Bradford and Bingley Group" are included within that general terminology.

What can the OFT do - what powers do they have?

Under the Consumer Credit Act, any business wishing to be involved in activities relating to credit must have a consumer credit licence. This means both lenders and collection agencies.

"The OFT have a duty to enforce the Act and monitor the fitness of all licence holders". This monitoring includes considering whether unfair business practices have been employed by a licensee.

The OFT state that when they receive "complaint information alleging that a licensee has engaged in practices of the type detailed in our guidance or alleging other concerns about fitness, we investigate such matters to establish the facts and to determine what action, if any, might be appropriate".

IBAS made the formal complaint against Bradford & Bingley to the Office of Fair Trading (OFT) under the OFT's Unfair Business Practices section of their Debt Collection Guidance document OFT 611 which was incorporated within OFT664 issued in July 2003. The press articles in the Financial Times of 17th June 2004 and the Sunday Express - Your Money section of 20th June 2004 outlined the bare fact of the IBAS complaint to the OFT. Many have since enquired about the background to this complaint and where the OFT documents to which our complaint refers can be found.

The Debt Collection Guidance document OFT664 was the final guidance and response to the consultation papers and guidance previously issued in OFT611 to clarify unfair business practices within the debt collection sector. Over a period of time from February 2001 until July 2003 the debt collection industry has been involved in considerable consultations with the OFT on various issues of concern to the OFT to enable deliberation and final guidance to be issued which would be binding on the industry.

OFT664 2.42 states "Now that the guidance has been issued in final form we expect debt collectors to abide by it." and the OFT believes that the final guidance "strikes a proportionate balance between the need for consumer protection and industry's ability to collect its debts in a fair manner." 

The OFT also state that within the scope of the guidance "licence holders should abide by the spirit as well as the letter of the guidance."

The IBAS Mortgage Shortfall Claims department are constantly in contact with lenders, solicitors or debt collection companies acting as the lender's agents. The lenders and their agents are all encompassed by the OFT Guidance and the scope of the OFT guidance provides for sanctions on Consumer Credit Licence holders if their debt collection practices cause the OFT to question their fitness to hold a consumer credit licence.

The OFT debt collection guidance applies to collection of debt once an account is in default. Collection of debts following default is an important area. IBAS has found this area to be sadly lacking common sense and normal human compassion. Also, where many lender's recovery staff still consider those in a default position to be 'outside' any voluntary codes of conduct relating to fair and reasonable treatment and who may therefore become 'fair game' for any number of different schemes to compromise them, legally or otherwise. IBAS consider the OFT's guidance is necessary to protect those in debt from financial or 'legalised bullying' and the further threat to fragile family circumstances, due to debt problems.

If you require truly independent and impartial banking advice plus direct assistance from a unique specialist organization campaigning on banking issues, which directly helps our members email us or call us on 01487 843444 for membership.