WIREDGOV

The 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.

This followed OFT 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, and
• not refunded brokerage fees when requested to do so.

NIZ Financial had also used a trading name, Bentley Cooper, which was not on its licence.

The OFT's investigation also showed that First Money Direct Ltd had misled a customer about the brokerage services on offer and failed to provide a prompt refund of upfront fees when required to do so.

The two companies were also 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.

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.'

NOTES

1. Credit brokerage consists of introducing customers seeking credit or goods on hire to businesses that provide credit, or other credit brokers.
2. Read the Insolvency Services press release.
3. Both revocations noted above may be subject to appeals to the General Regulatory Chamber of the First Tier Tribunal. Details of all recent OFT actions are on the public register.
4. The Consumer Credit Act 1974 (the Act) places a duty on the OFT to ensure that licences are only given to and retained by those who are fit to hold them.