Home owners need to watch out: they could lose their properties due to debts as small as £600, the Office of Fair Trading has found. An investigation by the regulator revealed four banks had told customers to pledge their homes against non-mortgage debt. Caroline Clark, a Licensed Conveyancer at Kidd Rapinet's London Office says: "Obviously any lender who is owed money should be entitled to recover it, that's only fair. However, it is one thing a lender obtaining security for their debt, it is another making a borrower homeless for a small debt."

The OFT said the Banks had sent "oppressive and misleading" paperwork to borrowers. The process of securing these debts against a home is known as a charging order. A bank can apply to a court for such an order if a borrower fails to keep up with their payments on a credit card, a personal loan or hire purchase commitments.

The number of charging orders has jumped sharply during the economic turmoil of the past five years from 45,000 to 164,000.

The four banks are Alliance and Leicester Personal Finance, American Express Services Europe, HFC Bank (part of the HSBC Group) and Welcome Financial Services (part of Cattles).

The banks co-operated fully as part of the investigation and have made changes recommended by the OFT. The OFT said it is working to ensure that the whole banking industry uses charging orders and other debt enforcement tools responsibly.

Caroline Clark comments: "Clearly people need to be aware of the potentially awkward position they could find themselves in. The point seems to be: seek advice before signing or agreeing to anything."

If you feel you may need advice, Caroline Clark can advise you on the latest law in this field. Call heron 020 7024 8066 for further information.