Consumer watchdog Which? has urged people who have taken out loans with North London Securities to check their contracts immediately. The group is concerned that people could be in far deeper debts than they realise because of dirty tricks employed by the company.

North London Securities made the headlines in 2004 when a judge wiped off the £400,000 debt of a Liverpool couple that had originally taken out a £5,750 loan.

Which? has come across several cases where customers' loans have ballooned from the original amount.

Nottingham-based Rick Jones borrowed £7,700 from the company in 1991. Despite having paid back £28,000 since then, the loan currently stands at £120,000. The loan grew because thousands of pounds of interest built up on a small upfront fee of £259.

A common trick of the company, which also operates as Broadwick Financial Services, is to defer a small legal payment until the end of the loan, but compound interest on that figure at very high rates of interest.

Which? spokesman Neil Fowler said: 'We're concerned that the cases we've come across are just the tip of the iceberg. There may be many more people who have no idea that they owe thousands of pounds more than their original loan.

Which? has been lobbying for stronger consumer credit laws. We hope the new Consumer Credit Act will help consumers challenge any unfair terms linked to credit contracts.'

The company is believed to have around £1.6m of outstanding debt still owed to it. It is owned by Harvey Collis, who lives in a £1m house in Hampstead Garden Suburb in North London, but operates his money lending company from a local flat.

The Meadows had their loan with the company wiped out after taking the case to court in October 2004. The company attempted to appeal the decision but it was thrown out by the Court of Appeal in July last year.

Copyright © 2005 First Mortgage Trust