A group of Cheshire-based debt management and loan brokerages have been wound-up in the High Court following an investigation by Company Investigations of the Insolvency Service.

Carter & Carter Financial (Management) Limited, theloansupermarket.co.uk Limited, Easysteploans (UK) Limited and T.L.G Loans Limited were wound up on the grounds that their businesses served to operate against the public interest. Carter & Carter Financial Limited, which also formed part of the investigation, was wound-up separately on a creditor’s petition.

Initially a debt management service was offered by the companies whereby they established how much disposable income a client had available to meet claims by creditors and a payment plan was agreed with those creditors on behalf of the client. Regular payments were collected from clients for onward payment to creditors after the deduction of fees. However, the investigation found numerous complaints that monies had been collected from clients, but not paid over to creditors. The debt management business was found to have operated in breach of Office of Fair Trading guidelines aimed at protecting consumers.

Subsequently the companies moved into loan brokerage, representing that they would source loan finance on behalf of clients. Clients were recruited through advertising and when they contacted the companies they were asked to provide credit/debit card details, purportedly for an ‘identity verification check’. However, no system was in place by which a client was credit-checked or otherwise assessed during the course of the call. Instead the process was found to be a device to obtain a client’s card details in order to charge unauthorised brokerage fees. In addition, clients were misled as to the likelihood of obtaining a loan. Of some 10,000 applications made to one master broker approached by the companies, only 71 had successfully resulted in a loan being made to the client.

The investigation also established ‘financial excess’ on the part of the company directors who made substantial cash withdrawals, leased a number of prestige cars and purchased Rolex watches which were passed to family members.

Colin Cronin of The Insolvency Services, Company Investigations, said: “Companies using deliberately misleading offers for financial gain is serious misconduct and it undermines the confidence the public have in business. I hope the action taken against these financial companies sends a clear and simple message if you set out to rip off your clients you will be closed down.