Hermes Acquires Log Book Loan Business

Jack Humphrey, Regulatory journalist
September 21, 2012 /

The Office of Fair Trading has granted Hermes Property Services Limited the right to use the trading name Log Book Loans.

In an investigation conducted by the OFT, Hermes appeared to have no ongoing relationship with the owners of Nine Regions Limited – a business that previously used the Log Book Loans trading name.

Log book loans are made under an agreement known as a Bill of Sale and are secured against a vehicle such as a car or motorbike. Although the borrower continues to have use of the vehicle, it legally becomes the property of the lender.

If the borrower defaults, the loan company can repossess the vehicle without a court order. This includes having the power to enter premises in order to recover the vehicle. Even after the vehicle is sold, the borrower can still be pursued if there is any shortfall in the debt.

Hermes acquired part of the loan book, the staff and business premises of Nine Regions in February 2012, shortly after the First Tier Tribunal struck out Nine Regions’ appeal against the revocation of its consumer credit licence and the business went into administration.

However, following the investigation, the OFT had concerns about some of Hermes’ business practices. The company cooperated fully with the OFT and proposed requirements (pdf 608kb) to address them.

The concerns were that:

Affordability assessments were not being completed to a satisfactory standard.

The explanation of the product was inadequate and was not being given to borrowers early enough in the transaction.

Staff were not fully trained on or familiar with procedures on conducting affordability assessments or providing explanations about the products.

The OFT has accepted Hermes’ proposals and imposed requirements to secure the changes to its business practices and to ensure it complies fully with the OFT guidance and law. Hermes could be fined if it fails to comply with the requirements, which include relevant parts of the Consumer Credit Trade Association Code of Practice on log book lending.

David Fisher, OFT Director of Credit, said: “We took this action to make sure that Hermes meets the standards we expect and we will be monitoring the business to make sure it observes the requirements we have imposed.”

 

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