The Office of Fair Trading has ordered broker Alpha Mortgages Manchester and two of its associated companies to improve their practices when offering bankruptcy annulment services to customers.
Alpha Mortgages Manchester, along with The Bankruptcy Protection Fund and Consolidated Finance, have been told to be more transparent with clients.
Bankruptcies can be annulled by a court in certain circumstances, such as when debts and expenses are paid off in full or guaranteed to the satisfaction of the court.
Some businesses offer recently bankrupted home owners a short-term loan secured on their property to repay such debts and expenses and enable them to seek a bankruptcy annulment.
An OFT investigation found that the three companies had not been transparent in their dealings and failed to adequately outline the risks involved. They had misled consumers about cancellation rights and in one instance failed to take account of the needs of a client with limited mental capacity.
Ray Watson, director of the OFT’s Consumer Credit Group, says: “The OFT expects fairness and transparency from this sector to ensure consumers are not misled and do not find themselves in a worse financial situation.”