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Personal loan firm slammed

28 October 2004

Personal loan firm North London Securities has been roundly criticised in the media and in court over attempts to exact £384,000 in overdue payment for a £5,750 loan.

Mr and Mrs Meadows of Merseyside took out the loan in 1989 to make some home improvements, but soon found themselves unable to pay spiralling debts as compound interest was added at a rate of 34.9 per cent.

Judge Nigel Howarth who is overseeing the case said: "It's agreed that 34.9 per cent is not extortionate, per se, but the combination of that with the ability to add interest to a compound rate has resulted in an amazing conclusion."

North London Securities defended their actions saying: "it has got to an enormous figure but that is simply the mathematics of it."

The firm added that it was not "unusual it is standard practice in business and commerce."

Even without the compound interest on unpaid debts, the Meadows would have owed a total of £20,699 at the end of their 15-year agreement.