This won't hurt a bit, says payday lender Toothfairy Finance

BY NICK SOMMERLAD ON SEPTEMBER 21, 2011 11:00 PM IN DEBTS AND LOANS

Northern Debt Recovery's Oliver Larholt

In an unfortunate choice of words, Northern Debt Recovery boasts that it is "one of the only UK agencies to offer a fully cradle-to-grave service".

After hearing from James Griffiths, we think we know what they mean. James, from Essex, took out a 400 two-week payday loan with Toothfairy Finance in March. This lot charges 2689% annual interest - or, more accurately, 9% per week plus a whole lot more if you fail to pay it back.

Which James did, after he lost his supermarket job. Within six weeks his debt had ballooned to 708. He asked for more time to arrange a debt management plan but Toothfairy insisted on all money within four weeks or they would add on extra fees.

Next, while he was getting the P45 that Toothfairy had requested as proof he'd lost his job, James got an email from Northern Debt Recovery accusing him of "ignoring all communications".

His 400 loan had now turned, in just 11 weeks, into a 1,212 debt, including NDR's 200 fee for taking on the case.

James explained he had no money to repay them until he found work and two days later came another email announcing his debt had been assigned to Marshall Hoares Bailiffs and he had just seven days before the start of legal proceedings.

He was told that once a county court judgement was secured, bailiffs would "seize goods up to 9 times the value of what you owe".

That never happened but what James wasn't told is that all three firms - Toothfairy Finance, which is a trading name for CIM Technologies, NDR and Marshall Hoares - are all registered to the same North London address and have a director in common - Greg Chapple (below), 45, from Tunbridge Wells, in Kent.

It's nearly a year since the Office of Fair Trading moved in to "address unsatisfactory business practices" at Toothfairy, ordering the firm not to:

"Levy charges that are disproportionate to the main debt and which do not reflect the actual, necessary cost of recovering a debt"

"Pressure debtors who have defaulted on an agreement to pay unreasonably large instalments when they are unable to do so"

"Make misleading representations as to the action it might take or might be taking to recover a debt" James reckons it did all three. If he's right, then Toothfairy risks a 50,000 fine per breach and losing its credit licence.

And we're not the only ones interested in this lot. Trafford Council Trading Standards are investigating a complaint about "threatening" calls from NDR.

Bracknell and District Citizens Advice Bureau accused Toothfairy of "harassing" one borrower who had a debt relief order so should no longer have been chased for repayment.

The Financial Ombudsman Service is also probing complaints of harassment - one where Toothfairy allegedly took 1,140 when they were told to take 500 from a borrower's account.

Involved in this operation is Oliver Larholt, 39, who spent 20 days in jail in 2002 after being convicted of possessing a flare pistol with intent to cause fear of violence.

He lives in a 2.8million apartment in the exclusive Belgravia area of West London and owns Toothfairy's offices in Hampstead, which are worth over 1m.

Larholt was a director of NDR until last November but its website northerndebtrecovery.com is still registered to oliver.holt@toothfairyfinance.com.

The same address was previously used to register toothfairyfinance.com. We don't know who owns Toothfairy, as the shareholder is another company registered offshore on the Isle of Man.

Larholt said Toothfairy has "100,000s of happy customers" and provides a "quick, cheap alternative" to unauthorised bank overdrafts.

He added that "collectors undergo extensive and ongoing training" and said Toothfairy has the lowest "bad debt" in the industry.

That we can believe.