Sub-prime lender Swift says it is surprised at the Office of Fair Trading’s threat to remove its consumer credit licence last week after discovering poor lending practices.
Swift, trading as Swift Advances and Swift Securities, is regulated under the Consumer Credit Act for second charge lending and by the Financial Services Authority for first charge mortgages.
Last week the OFT revealed that it has ordered the lender to improve its practices or risk losing its licence. It could also be fined up to £50,000.
Its investigation found the lender was failing to check whether applicants could afford the loan or to verify their income. It also did not fully check information in applications.
The OFT also uncovered evidence that in some cases Swift failed to fully explain the charges that could be incurred if customers fell into arrears and failed to exhaust alternative options before taking borrowers to court.
Mortgage Strategy revealed in December 2010 that Swift was being investigated by the FSA for its handling of borrowers in arrears and had set aside £9.4m to cover a potential fine and other costs.
But a spokesman for Swift says: “We were surprised by the tone of the OFT press release. At no point during the investigation or during the adjudication procedure was it suggested that Swift’s licence was in jeopardy.”
But David Fisher, director of consumer credit at the OFT, says: “Credit businesses must lend responsibly and failure to do so can have a serious impact on borrowers. We require Swift to significantly improve the way it carries out its business. If it fails to comply with these requirements, it will face further enforcement action.”