Challenging unfair loan charges London North Securities

You are likely to have been asked if you want to 'add extras' onto your loan

London North Securities - previously known as North Mount Securities and Abdane Finance Limited - and subsidiary Broadwick Financial Services, are companies whose customers have been left owing much more than their original loan amount.

Advice from Which? is to check your position now. We’ve come across several cases where individuals who have taken out loans with these lenders have ended up in huge debt through no fault of their own. In some cases they have lost their homes.

Why is this?

If you have ever had dealings with a firm going by one of these names then you should take notice and ask the following questions; have you ever had extras added to your loan?; and have you ever gone into arrears on your loan?

Adding extras

Lenders often ask you if you would like ‘extras’ such as legal fees, broker fees or even buildings insurance to be added to your loan rather than paying for them up front. This is a fairly standard practice, however in the case of these two firms, the fixed monthly loan repayment didn’t include these ‘additional’ costs.   

Therefore even though borrowers were chipping away at their loan each month, these fees were never repaid. As a result they attracted ‘default interest’ at typically high rates from day one.

Furthermore, the interest charged is ‘compound interest’ whereby the charge is always levied against the full amount.

This works as follows; if you had a debt of £200 and accrued £1 interest in the first month then the interest payment in the second month would be calculated on the new amount of £201 rather than the initial amount of £200, making the fee incurred larger.

As the interest owed on the debt is charged at the new higher amount each month, it is increasing at a much faster rate than other types of interest.

The result is that a small, innocent-looking fee of a few hundred pounds, can turn into thousands before you know it.

Arrears penalties

If you have ever gone into arrears with these lenders, default interest will have been charged on those arrears and will continue to be charged until the arrears are cleared.

Sometimes even when your arrears have been paid back, the interest that’s built up hasn’t been cleared, and you haven’t been asked to clear it. This is a problem as the charges keep building up and the bill gets bigger and bigger.

The biggest problem is that often you don’t know this hidden debt is building up until you come to redeem the loan.

What can you do?

You may be able to challenge the loan agreement you have with these firms. We’ve seen several people do this who have been able to successfully walk away from their debt.

However, you'll need legal advice and you'll need to get some information from the lender before you go any further.

1Contact the lender

You will need to write to your lender and ask it to send you a copy of your loan agreement if you don't already have one.

You also need to request the total amount the lender would expect paid back if you redeemed the loan now –the redemption amount – and a detailed breakdown of this amount so that you know how it is made up. This is because the figure may include other charges, not just the loan.

For a template letter, please refer to the final page of this guide.

2Seek advice

If you owe a lot more than you expected then get help. You can get free advice from a number of organisations that specialise in debt advice, however be aware that if you wish to challenge your loan agreement you will need specialist legal advice.

3Enlist a solicitor

Get legal help. ‘No win, no fee’ arrangements have changed the legal system so that people on lower incomes may have more opportunities to legal help. However you should be very careful about which firm you choose.

Also, it is vital that you use a solicitor who specialises in the field of consumer finance litigation - the Community Legal Service (0845 345 4345) provides information about legal services in your area. Or Which? can refer you to a specialist solicitor who may be able to help. Contact Teresa Fritz through the Which? customer services helpline on 01992 822 800.

We cannot guarantee that you will have a case against your lenders, or even if you do that it will be successful, however we do know of individuals that have taken cases against these lenders and won. The main thing is to find out where you stand now.

Template letter

Use the following letter as a base for your claim, changing the specifics such as address and reference number where necessary.