Business Loan Difficulties

[Alfie180768]

Hi,

 

This is my first post and I hope in the right section. Apparently this forum is the best place for advice.

 

This is one that has had lawyers and the Financial Ombudsman scratching their heads.

 

In 2015, I approached a local firm (promoted intently by Channel 4 - this chap is quite the celebrity) for a business loan. On making the application, we were then invited to their office to go over the paperwork. The office manager of the firm (also been on the telly) then proceeded to insist on a copy of our then Director's driving licence - the paper copy of the driving licence. Dutifully, the director obliged and presented the paper copy of the licence. The director then signed the form, and the £5000 start-up loan was sent through to our business bank account.

 

The repayments were set as follows:

 

Initial payment of £266.25 then 46 months at £166.25 with a final payment of £266.25.

 

The £200.00 was the administration fee.

 

Payments commenced the month of May 2014 and all was well.

 

In August 2015, I met with our accountant to discuss year end - we were discussing the social element of the business which was a Ltd by share company. Accountant advised us to start a Ltd by Guarantee company as we were seeking grant funding to run a couple of projects for the local community. I asked the accountant what we were to do with the business loan and on looking at the paperwork he advised me the loan agreement was in fact a hire purchase agreement and that it was a legal problem rather than an accounting one.

 

Here is the part which has had people scratching their heads.

 

The agreement for this loan is actually a hire purchase agreement - on digging deeper, we looked at the paperwork and realised this was correct - we only had the carbon copy of the agreement also. The top copy had been sent to our director after the funds were transferred. On looking at the top copy, the date and the agreement number were not on there and it was quite evident the carbon copy did not match the top copy. Staring me in the face and as plain as the nose on my face was "vin number" chassis number, registration number, all relevant to a HP agreement used for a vehicle.

 

I emailed their office asking them for an explanation and received a brusque response in that the agreement was explained at the time of signing. I got absolutely nowhere with this stance. So I cancelled the standing order to see ensure they would contact me. Sure as eggs are eggs, I received a phone call as did our director stating the payment had not been made.

 

I made the outstanding payment and continued to chase both the original agreement to match our carbon copy and an explanation of the hire purchase agreement detailing the goods under the hire purchase agreement. I questioned the goods were non-existent although we do accept we received the £5000 funds. We had paid for well over a year.

 

On further digging, what was originally offered, was a rate of 14.9% with an APR of 29.9%

 

We approached a solicitor, he wrote to them on our behalf - they refused to acknowledge this correspondence.

 

The director by this time - (September 2015) had resigned as a director from the company due to ill health - he maintained that he was unhappy with the loan agreement and he realised he had signed as a personal guarantor which was not explained to him at that time.

 

I decided again I was going to not honour the payment - and wrote to the company telling them I had cancelled the standing order. They then set about sending hand delivered letters to our director's home address - he has had two heart attacks.

 

They also sent the same letter to our office and I raised a dispute outlining how we had been mis-sold this "product" and at no time had we taken out a hire purchase agreement.

 

Then this company called Falcon Management Services Ltd sent a letter demanding a payment arrangement. In North Shields - I contacted them and began to make payments to them of £250.00 per month to clear the debt.

 

Bizarrely, after paying three months, I received a letter from a new account manager from the local firm asking me to set up an arrangement to clear the arrears - I informed this new account manager that we had been paying FMS £250.00 per month for three months and I was amazed that as they had instructed the company to chase the debt that they were unaware this arrangement was in place.

 

I received an email back they were unaware I had made these payments and as they had received no payments from FMS they were cancelling their contract with them and the debt was returning to them.

 

I began to challenge them on the agreement again - endless emails occurred and I seriously challenged the agreement. They then sent me a blank loan agreement for me to complete. That was in November 2015, my solicitor pushed forward with correspondence asking them to explain the interest rates and the hire purchase agreement - gave them 14 days to respond and to date, he or us have not heard anything since.

 

This finance arrangement is led by a person as I said earlier, with various TV appearances on CH4 - claims he is applying for a banking licence, and is still advertising business, personal loans on his website and claims he is a peer-to-peer lender. The company is registered with the FCA with an interim permission number for whatever activities come under that IP.

 

Has any person here got any advice in how to proceed with this one? Naturally, I want to out the activities - but I am loathe to - this person has serious support from people in Government - further diligence has led me to some questionable results. I hae spoken to many legal representatives and they are scratching their heads and keep asking me where the goods are. The FO has an open complaint from the former director as the finance is on his credit file.

 

Any help would be appreciated. Another forum has told me it is fraud but I am not sure how I am to proceed at all. But I do not want any other small business to be affected as we have - and I know he has loaned money to a woman in the town who set up a florists.

 

Help - please.

 

Thank you.

[BankFodder]

I'm trying to unravel this a bit – so it will take several readings.

 

However, for the moment I suggest that you read up on Falcon Management Services who figure on this forum and elsewhere. You can start off looking on this sub- forum here: – http://www.consumeractiongroup.co.uk/forum/forumdisplay.php?167-Debt-Collection-Agencies

 

You say that the top copy and the carbon copy are not the same. In what way do they differ?

 

I understand that this loan was not made to an incorporated company because you incorporated later on.

 

You say that solicitors are scratching their heads – please explain a bit more.

 

You say that the FOS are scratching their heads – can you please tell us about the complaint which you must've made and what their response has been?

 

I'm really trying to understand the issues here that you say that it sounds like fraud – yes it probably does – I'm afraid that alleging fraud is unlikely to help you so I would steer clear of that for the moment.

 

I'm scratching my own head here but only because the story seems a bit convoluted and I'm trying to clarify it all in my mind

[BankFodder]

Incidentally, one of things I don't understand is slightly what is the problem? You borrowed money which you received. You have been repaying it. Apart from the money which you have appeared to pay to Falcon, are you out of pocket at all?

 

I don't really understand the bit about the vehicle.

[Alfie180768]

Hi BankFodder,

 

Thank you for replying - I will do my best to answer your questions.

 

I have seen the Falcon Management posts - Although we were the debtor.

 

The top copy of the hire purchase agreement does not contain the date of signing or the agreement number. The carbon copy does.

 

The loan was made to an incorporated company

 

The solicitors I have spoken with have never heard of a hire purchase agreement being used as a process to offer a business loan - hire purchase has goods hired for the period of the agreement - we did not hire £5000 -

 

FOS is handling the complaint with our former director as the hire purchase agreement is on his credit file - although even they were stumped at first as they could not understand why he did not have a vehicle.

 

I have not claimed fraud, another forum poster has on a business forum.

 

In summary, our business applied for a business loan and have a hire purchase agreement used for vehicles. That is what the agreement is - it says it at the top of the form. Hire Purchase agreement - Outside of the Credit Consumer Act. I guess what I am asking is, how can any person or company, hire purchase £5000?

 

The PG applied to the former director, was not explained to him.

 

Please do ask away - I have likely explained it all clumsily.

[Alfie180768]

The business is not out of pocket - they are.

 

We have tried to contact them to resolve the dispute but they have blackwalled our business email.

 

As far as we are concerned, the payment to Falcon Management has been applied to our account - they instructed them not us. The people on the other thread are victims, we are not.

 

There is no vehicle - the agreement is for vehicles.

[BankFodder]

But it certainly sounds dodgy. It sounds to me is if maybe they use some device to get funds to lend to you and to make profit on it. Could this be possible?

 

However, if you continue paying them at the agreed rate – then is there any problem? Although you don't end up with a vehicle, you have the £5000 which eventually you have repaid. Apart from the fact that I don't like the bad feeling about it, I don't see that you are losing anything – and nor are they.

 

Of course there are the payments which you have made to Falcon and if your lenders say that they don't receive those payments then those sums are in issue. However, in terms of the main loan – the lending of the money and its repayment on this dodgy agreement, is there any problem about it if you keep on repaying?

 

I'm not quite sure why you stopped the repayments if it was all going ahead smoothly – even though you discovered that it has been done in a rather odd way.

 

Also, I don't understand how the top copy can be missing information which appears on the carbon. I would expect the other way round – if anything.

 

My question is probably demonstrate you that I don't really understand the whole story yet.

[Alfie180768]

Hi again,

 

You are being very patient with me. TY.

 

Yes - that is exactly what they have done. The office manager owns a car finance company.

 

On the agreement - it states the following:

 

Hire-Purchase Agreement - For agreements outside of the Consumer Credit Act. Primarily for Vehicles.

 

"This hire purchase agreement is made between (name of them)

 

"Particulars of Hirer"

 

Our company etc

 

Particulars of Goods

 

Make

Model

Registration Number

Vin Engine No - here it says "see attached schedule"

Body type

Colour

Mileage

New or Used

 

Financial details and Payments:

 

Cash Price of goods - the handwritten entry is £5000

 

Less pt/ex NIL

Less cash - NIL

Amount of credit - £5000

Hire purchase charge - £2980.00

Documentation fee - 100.00

Option to purchase fee - £100.00

 

Insurance information

 

Hire Purchase Price £8180.00

 

The ts and cs are that of a hire purchase agreement in relation to a vehicle.

 

The guarantee is in the name of the company - the indemnity details the name and address of the former director.

 

In the guarantee and Indemnity - where it says the type of agreement - HP agreement.

 

Before signing the Indemnity, the former director was not offered the opportunity to seek advice.

 

The other side of this - is that the company offering this facilities offers a savings scheme to local people - similar to that of Zopa or other peer-to-peer lending facilities.

 

Am I making more sense now?

[Alfie180768]

I ceased the payments originally as I had asked for a copy of the original agreement and was refused them.

 

And our accountant was unable to place this is a liability on the business due to the agreement being a hire purchase one - he kept asking me also for the details of the car we had taken out on hire purchase.

 

There is no car - we hire purchased £5K.

[BankFodder]

Now you suddenly referred to an "office manager" who apparently owns a car finance company. I'm sorry but I do get the impression that we are teasing information out from you by means of a thousand cuts.

 

Who is this office manager. What is the car finance company.

 

I really start not to understand why you haven't simply given us the whole story at one go.

 

As far as I can see, your only issue has been that you are not able to enter this loan into your accounts as some kind of tax liability because of the way it has been sold to you. Is this correct

 

It also seems to me that you – meaning you and the others involved – might have exercise greater diligence when taking out this loan. Do you agree with this?

[Alfie180768]

The Office Manager is employed by the company who gave us the loan - he does own a car finance company called Dominion Finance. He manages the office of the company.

 

Yes, we should have done some due diligence - we did not at that time. A small company that was looking for start-up finance and we were given an agreement that appears to be questionable. This has been the problem, seemingly - it is hard to put it out without getting responses such as you have which I understand.

 

Have you come across Bank on Dave?

[honeybee13]

These people?

 

https://www.burnleysavingsandloans.co.uk/

 

HB

[Alfie180768]

Hi Honeybee,

 

Yes, those people.

[BankFodder]

So the story seems to be that you need some money, you went to Burnley.

 

A meeting was set up and somehow or other instead of borrowing the money from Burnley, you borrowed money from a vehicle financing company which happens to be owned by the office manager and which is called Dominion.

 

It is that correct? The nature of the document which you signed with Dominion is not at all the nature of the document which you thought you were signing.

 

The payments that you have been making have been to Dominion. Is that correct?

[Alfie180768]

No, we didn't go to Burnley - we live here.

 

We applied to Burnley Savings & Loans for a business loan - as advertised on their website after the TV show was aired on his fight against the banks.

 

The "Office Manager" owns a company called Dominion Finance. We paid Burnley Savings & Loans - my reference to the OM owning a car finance company is relative to the hire purchase agreement our company received.

 

My query was, I should have been clearer, is that our business has hire purchased £5000 and our former director was used as a personal guarantee under a hire purchase agreement and is this legal?

 

Hope that makes more sense. Just being given a loan - and paying it back - which we did and have made attempts to since our solicitor has written to them and they have not responded as this was all laid out to them, does not negate the issue their agreements are somewhat borderline flaky. That was my query. Also, the loan/hire purchase agreement is not a legal arrangement for a business when it states quite clearly we have a vehicle which we do not.

[BankFodder]

I don't really understand very much of your last post.

 

However what I am starting to see is that you went to Burnley to get a loan. Somehow or other, the loan arrangement was hijacked by Burnley's office manager who has his own business and it was his business which gave you the loan in the form of a hire purchase agreement. I thought for a moment that maybe Burnley didn't know about this – but now you say that you paid Burnley so I'm very confused again.

 

I'm not surprised that the solicitor and the FOS are scratching their heads. – But only because we seem unable to understand what the story is

[Alfie180768]

Here are some digestible nuggets:

 

This is not a peer-to-peer lending facility - which it claims to be.

 

Mr Fishwick is a van sales dealer as well.

Burnley Savings & Loans was set up in 2011 to offer the local people alternatives to using high street banks as they are all fat cats and corrupt according to him.

 

 

He also took on payday lenders and victims of those caught up in them.

He paid off some people's PDL by offering loans to the people trapped in PDL cycles.

This was on the TV show aired.

 

 

He is applying for a banking licence (according to This is Money) and has support from Chukka, Vince Cable and CH4.

 

Yet,here he is, or his outfit is, offering "business" loans under questionable agreements suggesting that a vehicle has changed hands under a hire purchase agreement and this is okay?

 

 

What about the people placing their funds into savings?

Thinking they are helping local businesses?

And the people who have signed a personal guarantee and indemnity without realising or being offered the opportunity to seek guidance on this?

 

 

The former director had a hand-delivered letter through his letterbox threatening court action after one missed payment. Even high street banks do not behave like this.

 

You think all of that is okay?

I certainly do not.

[BankFodder]

I'm not condoning anything but we are trying to help you with your own problem, not put the world to rights at the moment.

 

What have you actually lost and what do you want?

[dx100uk]

dubious maybe

but if you hadn't of stopped paying

none of the above would ever have happened.....

 

 

it is a non regulated agreement so PG is fine.

[Alfie180768]

So, by that theory, dodgy agreements are acceptable? Gotcha.

 

 

As a consumer, was the business misold a financial product?

 

And is it worth reporting them to the FCA, given they are the regulatory body?

 

The FOS will deal with the complaint from our former director - now they have all the paperwork - who appears to have a credit file entry that he did not apply for.

[Alfie180768]

dubious maybe

but if you hadn't of stopped paying

none of the above would ever have happened.....

 

 

it is a non regulated agreement so PG is fine.

 

The above happened when the original document did not match the carbon copy signed by our former director. Which was requested time and time again. Prior to me as the major shareholder in the company on the recommendation of our accountant, to seek advice on the legitimacy of a hire purchase agreement with blank spaces for an imaginary vehicle.

 

There is a country mile between a guarantor and an indemnity - so a PG is not just fine.

 

We have a business overdraft that quite clearly outlines a PG and the responsibilities this brings.

[dx100uk]

no i'm not saying its ok.

 

what i'm saying is that none of the problems would have happened

had you not chosen to stop payments.

 

did the director sign the PG?

 

easiest way might simply be for them to write it off.

 

had many dealings with falcon

I wonder where your money went...

 

you should be getting all you payments back

and suitable compo for the distress caused and damage to credit file.

 

the FOS should sort that out.

 

The company is registered with the FCA with an interim permission number for whatever activities come under that IP.

 

might be worthy for you to inform them rather than the FOS..

one underlying issue, will be...

 

Hire-Purchase Agreement - For agreements outside of the consumer credit Act. Primarily for Vehicles.

[BankFodder]

So, by that theory, dodgy agreements are acceptable? Gotcha.

 

 

As a consumer, was the business misold a financial product?

 

And is it worth reporting them to the FCA, given they are the regulatory body?

 

The FOS will deal with the complaint from our former director - now they have all the paperwork - who appears to have a credit file entry that he did not apply for.

 

 

The picture as I see it that you needed money so you sought a loan. You were given the loan and you started making repayments. There was absolutely no problem until you realised that the people who had granted to you the loan seem to have done it in some dodgy way, presumably for their own purposes.

 

However, this didn't particularly impact on you and whether or not the lenders were involved in some funny dealing, you had your money and you knew the terms upon which it was to be repaid. Despite this, you decided to stop paying because you didn't like the way the paperwork had been done. Your cessation of payments has resulted in certain problems arising – which might have been expected regardless of the kind of loan which you received.

 

I'm sorry to say I think that you have handled it very badly. I think you're quite right in being worried about the paperwork and the way the loan was given to you. However, to seize upon this as a reason for withholding your payments was, in my view – unjustified. This has added another layer of difficulty to the entire arrangement and I'm sorry to say I think that this is a problem of your own making.

 

I think you certainly should have reported the matter to the FOS and also to trading standards. I think you should also have put it all very formally in writing to Burnley so that it became clear that you are acting transparently and that you were not implicated in any strange goings-on which had been crafted by Burnley or the office manager.

 

I don't see that you were at risk of suffering any damage or any loss to yourselves – other than the loss of some tax benefit. On the loan of £5000, I can't imagine that that loss would be particularly great and I think that to a certain extent you should possibly share in the responsibility because of your failure to exercise diligence by reading the papers thoroughly before you sign the loan agreement.

 

Presumably the lenders are benefiting in some way – but it doesn't seem to me to be particularly at your expense. It doesn't seem to me that you are the victims of this. You have simply become the vehicle [sic] for some scheme which presumably has created an advantage for them. However, your approach has now produced a new and unnecessary problem.

 

I have no idea what your complaint has been to the FOS but I can imagine that they are scratching their heads because they are unable to identify any loss or disadvantage that you have suffered. Also, it may be that your complaint has not focused on the apparent wrongdoing by the lenders - not upon any loss sustained by yourselves and as a result the FOS have not considered that it is within their remit to investigate the question of losses because you have not raised it with them. It may not fall within their remit to investigate"mere" wrongdoing anyway.