The Office of Fair Trading has warned subprime lender Swift that it must improve its lending and collection practices or risk losing its credit licence.
An OFT investigation found Swift, which trades as Swift Advances and Swift Securities, was giving secured loans to customers with poor credit histories without checking whether they could afford it.
It was not verifying their income or taking account of their other financial commitments and fully checking the information provided in the application.
Swift failed to fully explain the charges that could be incurred if customers fell into arrears and failed to look for alternative options before taking borrowers to court if they fell behind on their repayments.
The OFT says Swift must ensure proper assessments of a borrower’s ability to repay the loan are conducted, repossessions are taken as a last resort and the lender must be transparent about charges. The lender is also subject to an FSA investigation with regard to its handling of customers in arrears.
OFT director of consumer credit David Fisher says: “Credit businesses must lend responsibly – failure to do so can have a very serious impact on borrowers. We require Swift to significantly improve the way it carries out its business. If they fail to comply with these requirements, they will face further action.”
Your Mortgage Decisions director Dominik Lipnicki says: “You would have thought these lenders would have learnt their lesson.”