Begbies Traynor claims that data providers lost confidence in loan firm Cash Finance Direct (Holdings) Limited-trading as Horizon Finance - after an FCA warning about a firm of a very similar name was issued last year.
The Manchester-based liquidators believe that the warning on the 17th of December, urging the public to be aware of an unauthorised firm trading under the name of Cash Finance Direct, spooked data providers of Cash Finance Direct (Holdings) Limited, formerly of 7 St Peters Gate, Stockport, leading the providers to stop sending business to the firm.
Two days later the FCA clarified via a notice that there was no connection between the two firms in any way.
Following this, Cash Finance Direct (Holdings) Limited suffered cash flow and operating implications and eventually stopped trading altogether on March 27th of this year with the loss of 117 jobs.
Francesca Tackie and Gary Lee, Partners of Begbies Traynor’s Manchester office, have criticised the watchdog’s initial notice and made a direct link to the firm’s troubles.
Francesca Tackie 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.
“We are aware that there are a number of customers who were due refunds from the company in respect of call charges and we would urge them to get in touch with us.”
A spokesperson for the FCA reminded that the regulator did publicly clarify that its warning was not directed at Cash Direct Finance (Holdings) Limited and that it had apologised to the loan firm.
The spokesperson said: “The FCA posted a warning on its website about an entity styling itself [as] Cash Finance Direct on 17 December 2014.
“On 19 December 2014 we clarified that the warning did not relate to the similarly-named Cash Finance Direct (Holdings) Ltd.”
The FCA also wrote to Cash Finance Direct (Holdings) Limited to apologise for any confusion caused and explained the steps it had taken to clarify the situation.
“We also advised the firm that we were happy for them to share the letter with its lenders and suppliers to give assurance that the original warning notice related to Cash Finance Direct rather than Cash Finance Direct (Holdings) Ltd.”
According to the London Gazette, the liquidation of the company was voluntary.
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