The OFT probe, which examined a host of credit adverts, exposed serious compliance failings by Dial4aloan that breached Section 46 of the Consumer Credit Act.
Key failings include no indication by Dial4aloan of the length of time a borrower would have to make repayments and the publication of potentially misleading APRs and credit advertising information.
An OFT spokesman told Mortgage Strategy: “This settlement is a result of proactive policing of the market and will hopefully ensure consumers are better protected. It affects Dial4Loans’ whole national newspaper advertising campaign.”
Dial4aloan, sponsor of ITV’s Coronation Street, agreed to withdraw its advertising after learning of the OFT’s enquiries, so avoiding a full-scale investigation.
The company is a prominent member of the Finance Industry Standards Association, an organisation which prides itself on ensuring its members comply with statutory regulations. Companies found to have breached FISA’s guidelines and those of the OFT are routinely fined or expelled from the trade body.
No-one was able to comment on the OFT enquiry at Dial4aloan or the cost to the company of pulling its ad campaign. And FISA general secretary Jim Harper was unavailable when Mortgage Strategy contacted the organisation to discuss the ramifications for FISA members.
Dial4aloan was bought in 2002 by Cattle plc, a major sub-prime lending organisation. Mortgage Strategy understands that founder John Webb pocketed in excess of £15m when the sale was completed. Since the acquisition, Cattle has also found itself under critical scrutiny by consumer bodies.
Earlier this year, the National Consumer Council filed a ‘super complaint’ with the OFT calling on the regulator to launch a major enquiry into the £2bn home credit industry. Cattle is one of the four leading companies in this sector.