The Office of Fair Trading (OFT) is warning credit brokers to improve the way they deal with customers’ upfront fees or risk losing their licences.
The warning follows OFT action to revoke the credit licences of two associated businesses, NIZ Financial (UK) Ltd and First Money Direct Ltd, after uncovering unfair business practices. For example, the OFT had concerns that NIZ Financial (UK) Ltd and/or its associates had:
- debited the current debit or credit cards of consumers without their authority
- taken upfront brokerage fees – often after claiming that loan applications had been ‘pre-approved’ or ‘approved in principle’ – when no loan was provided or it was later offered at a higher APR/lower amount
- not refunded brokerage fees when requested to do so
Credit brokerage consists of introducing customers seeking credit or goods on hire to businesses that provide credit, or other credit brokers. NIZ Financial had also used a trading name, Bentley Cooper, which was not on its licence. The two companies were associates of Carter & Carter Financial (Management) Limited, theloansupermarket.co.uk Limited, Easysteploans (UK) Limited and TLG Loans Limited, which were closed down by the Insolvency Service in May 2010.
The OFT’s decision to revoke the licences is subject to appeal and does not finally take effect until the end of any appeal process.
OFT will take enforcement action against credit brokers
Ray Watson, Director of the OFT’s Consumer Credit Group, said: ‘Credit brokers must not abuse their positions or mislead consumers. If they do, we will take enforcement action to remove them from the market.’
Which? credit expert Martyn Saville commented: ‘It’s good to see the OFT shutting down credit brokers who act irresponsibly. Too often we hear of consumers who have been told they will be accepted for a loan in exchange for an upfront fee to a broker, only to find they either can’t access a loan at all or are offered a much higher interest rate than that advertised.’
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