OFT Revokes Yes Loans’ Licence

Jack Humphrey, Regulatory journalist
March 09, 2012 /

Yes Loans Limited, one of the UK’s largest brokers of unsecured credit, is unfit to hold a consumer credit licence, as are two associated businesses, Blue Sky Personal Finance Limited and Money Worries Limited.

This was the decision of the Office of Fair Trading (OFT) that revoked the licences of the three firms in light of evidence that Yes Loans has failed to comply with the Consumer Credit Act 1974 and associated regulations, and with requirements previously imposed by the OFT.

The OFT found evidence that Yes Loans had engaged in unfair business practices. Allegedly, it used high pressure sales tactics to persuade consumers to provide their debit or credit card details on the false premise that they were required for an identity and/or security check. The claims went on to say that Yes Loans deducted brokerage fees without making it clear that a fee was payable, and/or without the consumer’s consent.

The unfair practices also included the company’s failure to introduce some consumers to the product originally sought, frequently arranging short-term, high interest, loans instead
misleading consumers into believing it was a loan provider rather than a credit broker, and treating customers poorly by not providing refunds in a timely manner.

Following the OFT’s investigation, Yes Loans drastically changed how it operates, including no longer charging upfront fees. A number of other associated companies also surrendered or withdrew their consumer credit licences or applications.

Despite these changes, the OFT determined that the evidence of prolonged engagement in deceitful and oppressive business practices, and the continuing presence of some of the staff responsible for running the businesses, makes them unfit to hold a consumer credit licence.

David Fisher, Director of Consumer Credit at the OFT, said: “We will take decisive action to tackle businesses that fail to treat people properly, especially the most vulnerable.

“This action also makes it clear that belatedly changing business practices when facing the prospect of enforcement action by the OFT does not make a company fit to hold a credit licence.”

The OFT imposed 15 requirements on Yes Loans licence in July 2009.

Credit brokerage consists of introducing customers seeking credit or goods on hire to businesses that provide credit, or other credit brokers.

The OFT has a statutory duty under the Consumer Credit Act 1974 to administer the consumer credit licensing regime, and must be satisfied that a licensee is fit to hold a consumer credit licence.

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.

Yes Loans, Blue Sky Personal Finance Limited and Money Worries Limited are given 28 days to appeal the OFT’s decision. The determination is subject to appeals to the General Regulatory Chamber of the First Tier Tribunal. The OFT’s decision will not take effect until the appeal period has concluded.

On 24 November 2011 the OFT published guidance setting out the standards it expects from credit brokers and intermediaries.


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