FCA permission naming confusion causes company to fail
A Stockport loan call centre has gone out of business after it was incorrectly identified as not having proper permissions
On 17 December 2014, the FCA posted on its website a warning about an entity calling itself Cash Finance Direct.
A similar company named Cash Finance Direct (Holdings) Limited, which traded as Horizon Finance, also existed and did have an interim permission.
The similarity appeared to create confusion in the market and as a result of the notice, business partners and suppliers to Horizon Finance ceased trading with it, resulting in cash flow problems that caused the business to fail.
Although the FCA put out a separate note stating: “We should have made it clear in our warning that Cash Finance Direct is in no way connected to Cash Finance Direct (Holdings) Limited,” on the 19 December and apologized for any confusion caused, the damage had been done, as Cash Finance Direct (Holdings) has now been placed in liquidation.
Corporate rescue and recovery practise Begbies Traynor has been appointed to oversee the administration of the firm’s liquidation.
Francesca Tackie, partner at the Manchester office of Begbies Traynor said: “Cash Finance Direct was severely affected by the erroneous notice placed on the FCA website as nervous data providers stopped sending work through, fearing they were dealing with an unauthorised company.
“Whilst the FCA later issued a public apology on its website, the company never fully recovered and was unable to trade out of its difficulties”.
The company’s 117 workers are expected to be made redundant.