An Office of Fair Trading investigation found Swift was giving secured loans to customers with poor credit histories or limited access to credit without:
- checking whether they could afford the loan
- verifying their income
- taking account of their other financial commitments and personal circumstances
- fully checking the information provided in the application.
The OFT also uncovered evidence in some cases that 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.
As a result, the OFT has imposed a set of requirements on Swift, which ensures it must:
- carry out proper assessments of a borrower’s ability to repay the loan without undue hardship
- only take steps to repossess a borrower’s home as a last resort
- be transparent about their charges and when they apply.
Mortgage Strategy revealed in December 2010 that Swift Advances is being investigated by the Financial Services Authority for its handling of borrowers in arrears and has set aside £9.4m to cover a potential fine and other costs.
David Fisher, director of consumer credit at the OFT, 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 enforcement action.”