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Yes Loans Is Saying No After Being Stripped Of Its License

by Jim ONeil on March 12, 2012

in Personal Finance News

The Office of Fair Trading (OFT) has stripped one of the largest UK loan brokers of its credit license. Yes Loans is no longer permitted to sell loans following the discovery that it engaged in “deceitful and oppressive” practices. OFT representative David Fisher stated that the agency will continue to take action against businesses that treat consumers, particularly those considered most vulnerable, unfairly.

Portions of the credit industry in general were recently criticized by a committee of MPs as being “opaque and poorly regulated.”

Based in South Wales, Yes Loans is a credit broker, a company that matches consumers looking for loans with organizations that provide unsecured financing. The company has been under investigation by the OFT for a while and the agency found that it was engaging in misleading practices.

Some prospective borrowers were led to believe that the company was a lender, not a credit broker. These individuals were asked to supply credit or debit card details supposedly required for identity verification.

With the card information in hand, the company charged fees against the credit or debit accounts without consent of the account holder. Yes Loans never clarified that a fee would be due and it was not timely with refund issuance. Instead of being matched with the desired loan, some customers were provided payday loans with high interest rates.

Following the 2009 OFT investigation, Yes Loans revised some business practices including no longer charging fees up front. This did not prove enough for the OFT. The regulator stated that the prolonged period of oppressive and deceitful business practices and the continued employment of some members of leadership made Yes Loans “unfit to hold a consumer credit license.”

In addition to Yes Loans, Money Worries Limited and Blue Sky Personal Finance Limited, two associated businesses, had their credit licenses revoked.

The affected businesses now have 28 days to file an appeal of the OFT decision. Yes Loans alone reportedly processed more than 50,000 applications for personal loans each month. In exchange for matching customers with unsecured loans ranging from £250 to £25,000, Yes Loans charged an arrangement fee of about £69.50.

The Financial Ombudsman Service conducted formal investigations of 133 complaints regarding Yes Loans in 2011. Between June and December 2011, 83 percent of complaints were decided in favor of the customer.

Mr. Fisher explained that “belatedly” changing its business practices due to possible OFT enforcement action does not necessarily qualify a company to retain its credit license. The watchdog found that Yes Loans used “high pressure” tactics when asking customers to provide credit and debit card details.

This and its other unfair business practices are violations of the Consumer Credit Act 1974 and additional regulations.

Directors for Yes Loans and the other two affected businesses claim that they made “significant and fundamental advancements” following the OFT investigation. They are currently seeking guidance on appealing the watchdog’s decision. Wales Online reports that the businesses are currently permitted to trade because their credit licenses are valid during the appeal process.

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