Payday loan firm Yes Loans has had its licence revoked after using "deceitful and oppressive business practices", the trading watchdog said today.
Yes Loans arranged expensive short-term loans for some consumers rather than the products they were initially asking about and misled consumers into believing it was a loan provider rather than a credit broker, the Office of Fair Trading (OFT) found.
The broker, one of the biggest of its kind in the UK, used "high pressure" sales tactics to persuade consumers to give their card details on the false premise that they were needed for security checks, the watchdog said.
Yes Loans also deducted brokerage fees without making it clear that a fee was payable and sometimes did this without customers' consent.
The watchdog has decided that two associated businesses, Blue Sky Personal Finance and Money Worries Limited, are also unfit to hold a consumer credit licence.
Yes Loans "belatedly" made some changes to the way it operated following an OFT investigation, including no longer charging fees up front.
But the watchdog said that "the evidence of prolonged engagement in deceitful and oppressive business practices, and the continuing presence of some of the staff responsible for running the businesses, makes them unfit to hold a consumer credit licence".
David Fisher, director of consumer credit at the OFT, said: "We will take decisive action to tackle businesses that fail to treat people properly, especially the most vulnerable.
"This action also makes it clear that belatedly changing business practices when facing the prospect of enforcement action by the OFT does not make a company fit to hold a credit licence."
The directors of Yes Loans, Blue Sky Personal Finance and Money Worries issued a joint statement which said their licences allow them to continue to trade throughout any appeals process.
The firms said they were "very disappointed" by the OFT's decision and are considering what their next step will be.
The statement said: "We have all worked tirelessly to implement significant and fundamental advancements to the businesses.
"We are disappointed that, despite recognising this, the OFT has decided to revoke the licences of three long-standing businesses, which provide a loans brokerage service and other personal financial services to many thousands of satisfied customers.
"We are currently taking advice with regard to lodging an appeal against the decision. No jobs are at risk within the companies concerned, regardless of the outcome of any appeal.
"Currently and throughout any appeals process, our licences remain valid and allow us to continue to trade."
Yes Loans has been trading as a broker in the sector since 2003 and describes itself as "a leading unsecured loan broker in the UK", processing around 50,000 applications a month.
Some 83% of complaints made to the Financial Ombudsman Service (FOS) about Yes Loans were upheld in favour of the customers in the last six months of 2011, up from 75% in the first six months of last year.
The ombudsman formally investigated 133 complaints made about Yes Loans during 2011.
The FOS said it receives "many more inquiries" about credit broking generally which are resolved without a formal investigation.
In general, the FOS has seen an 18% rise in credit broking complaints year on year, to reach 707 last year, with around two- thirds upheld in consumers' favour.
Common complaints about firms generally include consumers paying an upfront fee on the understanding that they will receive credit at a certain rate, only to find the rate is much higher than expected.
The OFT launched an investigation into Yes Loans after receiving a number of complaints from consumers.
In July 2009, the watchdog warned Yes Loans to make it clear that it was a broker and not a lender after people said they had been misled.
The OFT said the company must state clearly on its website and in literature that it offered a credit brokering service, under which it arranged loans for people with a third party, and that it was not a lender itself.
The companies have 28 days to appeal over the OFT's decision.