London-based credit broker Highview Financial Services Limited has lost its authorisation to conduct consumer credit activity for failing to pay compensation awards as directed by the Financial Ombudsman Service (FOS). Despite repeated requests by the FOS and the regulator, the Financial Conduct Authority (FCA), the firm failed to pay the sums due.
Failing to pay FOS awards is a direct breach of FCA rule DISP 3.7.12, and is also considered to constitute a failure to comply with FCA Principle 11, requiring firms to co-operate with regulators and other bodies. Any firm that fails to pay an award as directed by the FOS can expect to be stripped of their permissions by the FCA.
After the FOS found that Highview had taken a fee of £79.95 from a client bank account without authorisation, it ordered the firm to refund the amount of the fee, plus interest, and pay an additional £50 for distress and inconvenience. Another client also complained about a £79.95 fee being taken, and this client was awarded £75 for distress and inconvenience in addition to the order to refund the fee. So Highview has lost its authorisation for what appear to be fairly trivial sums.
Highview used the trading names Go Direct Finance, The Loans Line, The Loans Team, The Loans People and Liberate Loans.
The episode also illustrates the importance of not taking fees from clients’ accounts without their authorisation. A credit broker cannot request or take a fee or charge unless it complies with a series of requirements, which also apply to any fees to be paid to third parties.
Firstly, the firm must provide a credit broking information notice, which communicates the following information to the customer in a durable medium (a format which allows the customer to take away the agreement and consider its provisions):
• The full legal name of the firm as it appears in the Financial Services Register
• A statement that the firm is a broker and not a lender (or if the firm also acts as a lender, a statement that it is acting as a broker for the purposes of this transaction)
• That the customer is required to, or may be required to, pay a fee or charge for the firm’s services
• The amount of the fee or charge, or where this is not known, the basis on which it will be calculated
• When the fee or charge is payable, and details of the method by which the payment will be collected (e.g. via deduction from the contract, via cheque etc).
(Apart from the firm’s trading name and contact details, no other information should be included on the information notice).
Secondly, the firm must receive confirmation from the customer, also in a durable medium, that they have received the above information and are aware of its contents.
The firm must maintain records of each information notice, and the associated customer confirmations.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.