On May 8 2014, the Financial Conduct Authority (FCA) issued five warnings about firms suspected of carrying out consumer credit activities without its authorisation. These firms were Manchester-based debt adjuster GEO Finance Ltd; Liverpool-based personal loan lender City Loans; Stockport-based City Financial Ltd; London and Manchester-based personal loan broker UK Loans; and a broker of many types of loan, Loan To Loans, whose location is unclear.

None of these firms that have a website make any claims on their sites to be authorised by the FCA or any other body. Interestingly, the City Loans website appears to contain endorsements from three well-known daily newspapers. The site also says they are a ‘reputable’ company, which some might disagree with in the light of the FCA warning.

There has also been the first recorded example of an authorised credit firm being ‘cloned’, when a payday loan broker started using the name QuickCash. This firm is not authorised by the FCA, but a Dorset-based short-term lender called Chandler Hart Ltd, which uses the trading name QuickCashClub, is authorised. The website of the unauthorised firm is www.quickcash.co.uk, and even though it uses a UK web address and the FCA says it has evidence the firm is targeting people in the UK, the site actually refers to loan amounts in dollars.

Sometimes an authorised firm will adopt a very similar name to an existing regulated firm in an attempt to trick customers into thinking they are authorised. For example, on April 25 a warning was issued by the FCA about a firm using the name ING Bank, which was not connected to the well-known Netherlands bank of this name; and on May 7 a warning was given about a firm calling itself BNY Mellon Wealth Management, who have no association with the investment bank BNY Mellon. Cloned firms are often associated with cold calling by fraudsters, in that they use a name which appears to be that of a well-known reputable firm.

Customers are advised to check the Financial Services Register and the Consumer Credit Interim Permission Register to ensure that firms they deal with are authorised, and to report any unauthorised firms to the FCA. Customers who do business with unauthorised firms will not be able to make a complaint about that firm to the Financial Ombudsman Service, or make a claim to the Financial Services Compensation Scheme if the firm becomes insolvent.

As part of its enforcement activities, the FCA seeks to prevent firms carrying out regulated activities without its authorisation. Doing so is a criminal offence.