OFT investigates credit company

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The Office of Fair Trading: OFT imposes requirements on credit broker

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Re: OFT investigates credit company

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Press releases 2009


OFT imposes requirements on credit broker

139/09 4 December 2009
The OFT has imposed requirements on the consumer credit licence of Post Net Ltd and its associates Haymarket Lending Ltd, Financial Processing UK Ltd, and RG Debt Management Services Ltd.
It also trades under the names Advantage Loans, Credit Gain Services, Tenant Loans and Loanfinder UK.
Post Net is a broker of unsecured loans to people having difficulty getting a loan from a prime lender, often because of a poor credit rating or employment history.
An investigation by the OFT found that Post Net was misleading customers by falsely guaranteeing access to credit. The company was also failing to properly refund fees to customers when it was unable to broker suitable credit.
Customers who use a broker and do not accept the credit offered, no matter what the reason, are entitled to a refund less £5. Those customers that accept the credit but terminate the contract within the 30-day cancellation period are entitled to a full refund.
The OFT's requirements stipulate that Post Net and its associated companies must not mislead consumers by falsely guaranteeing credit or stating that consumers have been pre-approved for credit agreements. In addition, they must fully disclose the terms of the application before obtaining an arrangement fee, and refund customers who cancel agreements within a 30-day period.
A breach of a requirement can lead to a fine of up to £50,000 and may lead to action to revoke the licence.
Ray Watson, OFT Director of Consumer Credit, said:
'The OFT investigation gave rise to serious concerns with some of Post Net's business practices. We will monitor these requirements closely and will not hesitate to take further action if necessary.'
NOTES
1. Download Post Net and associates requirements (Word 268kb).
2. The OFT has a statutory duty under the Consumer Credit Act to administer the consumer credit licensing regime, and must be satisfied that a licensee is fit to hold a consumer credit licence.
3. The Consumer Credit Act 1974 provides a wide range of protection for consumers accessing credit. All traders engaging in credit activities such as lending or the brokering of loans must be licensed under the Act. All consumer credit licence holders must satisfy the OFT that they are fit to engage in those activities for which a licence is required and are subject to ongoing monitoring during the lifetime of the licence.
4. Where the OFT has evidence of any practices which appear to be unfair, misleading, oppressive, or improper, whether lawful or not, it has a range of enforcement powers including taking steps to refuse, revoke or suspend a licence, to impose requirements for a business to change its behaviour, or seeking undertakings or an Enforcement Order under the Enterprise Act 2002.
5. Under section 155 of the Consumer Credit Act 1974, a consumer is entitled to a refund (less £5) of the fee paid to a credit broker if for any reason the consumer does not enter into a relevant agreement within six months of an introduction to a source of credit or hire.
6. Where the OFT is dissatisfied with any matter in connection with a business, a proposal to carry on a business or any other conduct by a licensee, associate or former associate, the OFT may impose 'requirements' on the licensed business. Requirements may require a business to do or not to do (or to cease doing) anything specified for the purposes connected with addressing the OFT's dissatisfaction, or securing that matters of the same or a similar kind do not arise.
7. Under the Financial Services (Distance Marketing) Regulations 2004, a consumer has the right to cancel their contract within 14 days and receive a refund of fees paid. For more information about these regulations go to the Consumer Direct website.



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