The investigation found that as well as conning clients out of debt management and brokerage fees, the directors of the  companies misled customers and pocketed huge amounts of money for themselves, splashing out on Rolex watches and cars.

 

The firms – Carter & Carter Financial (Management) Limited, theloansupermarket.co.uk Limited, Easysteploans (UK) Limited and  T.L.G Loans Limited – were wound up on the grounds that their businesses “served to operate against the public interest”.

 

Carter & Carter Financial Limited, which also formed part of the investigation, was wound-up separately on a creditor’s  petition.

It was found that initially a debt management service was offered by the companies, whereby they established how much  disposable income a client had available to meet claims by creditors and a payment plan was agreed with those creditors on  behalf of the client. Regular payments were collected from clients for onward payment to creditors after the deduction of  fees. However, the investigation found numerous complaints that monies had been collected from clients, but not paid over to  creditors. 

The debt management business was found to have operated in breach of Office of Fair Trading guidelines aimed at protecting  consumers.

Subsequently, the group of companies moved into loan brokerage, representing that they would source loan finance on behalf of  clients. Clients were recruited through advertising and when they contacted the companies they were asked to provide  credit/debit card details, purportedly for an ‘identity verification check’.

However, no system was in place by which a client was credit-checked or otherwise assessed during the course of the call.  Instead the process was found to be a device to obtain a client’s card details in order to charge unauthorised brokerage  fees. In addition, clients were misled as to the likelihood of obtaining a loan.

Of some 10,000 applications made to one master broker approached by the companies, only 71 had successfully resulted in a  loan being made to the client.

In addition to debt management and loan brokerage clients not receiving the services they had paid for, the investigation  also revealed financial excess on the part of the company directors who made substantial cash withdrawals, leased a number of  prestige cars and purchased Rolex watches which were passed to family members.

Commenting on the case, Colin Cronin of The Insolvency Services, Company Investigations said: “Companies using deliberately  misleading offers for financial gain is serious misconduct and it undermines the confidence the public have in business. I  hope the action taken against these financial companies sends a clear and simple message; if you set out to rip off your  clients you will be closed down.

“This action should also serve as an important reminder to anyone seeking the services of a debt management or loan brokerage  company, always check the validity of any company asking for your personal banking details and quickly inform your financial  provider if you notice any subsequent unusual activity.”

Kevin Still, debt expert and director of Atlantic Financial Management, added: “We welcome intervention of The Insolvency  Service or the Office of Fair Trading (OFT) where they identify rogue operators whose activities detrimentally affect  indebted consumers and damage the reputation of genuine debt solution providers operating to robust codes of practice and in  the best interests of people with serious debt problems.

“With nearly two thirds of Debt Management Plans (DMPs) offered by the private sector it is important to set high standards  for all-round debt advice and the delivery of resultant debt solutions. Clearly, prompt disbursement of client payments to  creditors, regular client reviews and high retention of clients on their DMP are important factors and fundamental to  compliance with the OFT Debt Management Guidance.”

Source: The Times