The Office of Fair Trading (OFT) has moved to address unsatisfactory business practices of CIM Technologies Ltd, known as Tooth Fairy Finance.
Tooth Fairy Finance is a payday lender which typically lends amounts of between £100-£300 to students on a short-term basis via telephone or SMS.
The OFT has imposed requirements on Tooth Fairy Finance which set out that it must not vary the repayment date or amount payable in respect of the loan, unless this is specifically agreed in advance with the debtor or trade using names other than those permitted by its credit licence.
The regulator has also stipulated that Tooth Fairy Finance must not levy debt collection charges that are disproportionate to the amount owed.
It also has to appoint a suitably qualified person to advise on, and administer as necessary, legal and regulatory compliance.
Failure to comply with these requirements could lead to a fine of up to £50,000 per breach or to action by the OFT to revoke the company’s credit licence.
Ray Watson, the OFT’s Director of Consumer Credit, said: “Payday lending provides access to credit for consumers who have limited choices. It is imperative that those who offer payday loans do so responsibly and in accordance with the law. Where we are not happy with a business’ lending practices we will not hesitate to take action to protect consumers.””
