The Office of Fair Trading has told three associated companies, including Alpha Mortgages Manchester, to improve their practices when offering bankruptcy annulment services to customers.
Bankruptcies can be annulled by a court in certain circumstances, including when bankruptcy debts and expenses of the bankruptcy have been paid off in full or guaranteed to the court.
Some firms offer short-term loans, which are secured on the person’s property, to repay such debts and enable them to seek an annulment.
The OFT found the three companies had not been transparent in their dealings with customers and failed to adequately outline the risks involved. The companies had also misled customers about cancellation rights.
It has imposed requirements on the companies to improve their service, including a requirement to make sure the customer is fully aware of the costs and information is clear and accurate.
OFT director of consumer credit group Ray Watson says: “Bankrupt people are in a vulnerable position. They need to be given full and clear information about any offer that is made to them. These requirements make it clear that the OFT expects full transparency and fairness from this sector, to make sure that consumers are not misled and do not find themselves placed in a worse financial situation.”