OFT revokes Yes Loans Credit licence- but they can still lend you money
Wonders will never cease. The Office of Fair Trading (OFT), the organisation in charge of most consumer lending, including the majority of payday lenders, has finally revealed it does actually have some teeth and had revoked the credit licence of Yes Loans yesterday. However, it appears the OFT is also wearing a muzzle, because the decision will not take effect, and Yes Loans can still lend and collect money, for the next 28 days, pending an appeal.
The OFT took the decision after a review determined that there was “ prolonged engagement in deceitful and oppressive business practices”. Yes Loans, and sister companies including Blue Sky Personal Finance Limited and Money Worries Limited, have 28 days in which to appeal against the decision. Despite the OFT ruling that the business is “unfit to hold a consumer credit licence”, the companies can still legitimately continue to trade throughout the period of appeal.
The OFT found evidence that Yes Loans had engaged in unfair business practices, including:
using 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
deducting brokerage fees without making it clear that a fee was payable, and/or without the consumer's consent
failing 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
treating customers poorly by not providing refunds in a timely manner.
Naturally, this is not the first brush Yes Loans have had with the regulator. In July 2009, the OFT imposed 15 ‘requirements’ on them, and forced them to change their terms of business, warning that any breaches could result in a fine of £50,000 per breach. This new announcement, while suggesting that Yes really did not bother getting their act together in the interim, does not mention whether any fines have been imposed.
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.”
However, Sarah Brooks, Director of Financial Services at consumer action group Consumer Focus, said “the OFT has sent a very welcome message, that firms have to treat their customers fairly from the start. Yes Loans was first censored for its practices in 2009, so while the decision to revoke the licence is the right one it appears long overdue.
“To ensure the OFT can step in early to protect consumers, the regulator should have the ability to immediately suspend licences when serious misconduct is evident, rather than the current lengthy process.”
In a statement, directors of Yes Loans said they had worked “tirelessly” to implement changes to the business and expressed their disappointment at the OFTs decision. They said they were “currently taking advice with regard to lodging an appeal against the decision” but confirmed that no jobs are at risk “regardless of the outcome of any appeal.”
Call me a cynic, but that statement suggests that even if Yes Loans' licence is revoked, the directors could be planning to transfer all the staff, and business practices, to a new phoenix company, with a shiny new licence from the OFT.
Perhaps they could call it No Way Loans…