OFT revokes licence of London based lender

[Legal Beagles]

Reddy Corporation Limited - a second charge lender based in Forest Hill - has had its credit licence revoked by the OFT.

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[enaid]

Re: OFT revokes licence of London based lender

Reddy Corporation Limited - a second charge lender based in Forest Hill - has had its credit licence revoked by the OFT.

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Press releases 2012 -


OFT revokes licence of London based lender

75/12 28 August 2012
Reddy Corporation Limited (Reddy) - a second charge lender based in Forest Hill - has had its credit licence revoked by the OFT.
The licence was revoked after companies associated with Reddy and its owner, Mr Dharam Prakash Gopee ('Mr Gopee'), were found to have engaged in widespread unlicensed trading.
They were also found to have engaged in unfair and improper business practices, including entering into credit agreements which were not in the correct legal form. For example, the agreements did not include all the information required to make sure consumers were aware of the risks and obligations they were taking on, including the necessary information on charges that were payable.
Consumers who have entered into agreements with companies associated with Mr Gopee should seek advice on the enforceability of such agreements from a legal representative or service, such as Citizens Advice.
The associated businesses included Ghana Commercial Bunks Limited (now known as Ghana Commercial Finance Limited), Barons Finance Limited and Barons Bridging Finance plc. Another associated business, Barons Bridging Finance 1 Limited, also had its application for a licence refused.
The appeals process expired on 18 August 2012 and Reddy no longer has a consumer credit licence and can no longer provide credit to consumers.
Second charge loans, or 'homeowner loans', involve consumers with an existing mortgage taking out further personal borrowing secured against their home. Firms offering such loans must be licensed by the OFT. Defaulting on a second charge loan can ultimately lead to repossession of a borrower's property and, as such, it is considered to be high-risk under the OFT's approach to regulation.
Kate Pitt, OFT Deputy Director of Credit, said:
'Reddy and businesses associated with it were found to be treating the requirements of the Consumer Credit Act as discretionary and were engaging in widespread unlicensed trading. This behavior does not demonstrate the competence and integrity we require of businesses that offer credit to consumers.'
NOTES

1. The OFT's decision was appealed to the First-tier Tribunal - the independent judicial body that decides on appeals against OFT decisions. The Tribunal upheld the OFT's decision, stating that the aforementioned associates of Reddy, with the connivance or neglect of Mr Gopee, had engaged in widespread unlicensed trading and were treating the requirements of the Consumer Credit Act as discretionary.
2. Reddy and Barons Bridging Finance 1 Limited had until the 18 August 2012 to seek permission to appeal the First-tier Tribunal's decision to the Upper Tribunal.
3. The OFT has a statutory duty under the Consumer Credit Act 1974 to administer the consumer credit licensing regime, and must be satisfied that a licensee is fit to hold a consumer credit licence