Loan broker giant Norton Finance (UK) has entered administration, with Duff & Phelps appointed to handle the process.
The affairs of the Rotherham-based specialist intermediary – founded in 1988 – will now be dealt with by joint administrators Sarah Bell and Philip Duffy.
According to its most recent accounts for the year ending April 2010 the company recorded a trading loss of £3,190,684 with current liabilities exceeding total assets by £1,986,688.
The accounts explained the trading loss incurred “includes a substantial provision against future compensation claims resulting from the historic sales of payment protection insurance (PPI)”.
The accounts stated: “The current economic climate is challenging. The directors have concluded that the combination of these circumstances represent a material uncertainty which casts significant doubt upon the company’s ability to continue as a going concern.”
Also in the accounts auditors Allots Chartered Accountants raised doubts about the company’s continuing ability to operate as a going concern.
The report stated: “These conditions… indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern.”
Norton Finance (UK)’s directors at the time were Keith Stringer, Paul Stringer and Steven Mee.
Director Keith Stringer remains a director of Norton Finance Group, Norton Finance and Mortgages and Norton Financial Services.
According to a well-placed industry source many credit brokers have struggled to survive under the weight of PPI claims.
Insolvency News understands that the industry body representing finance brokers – the Association of Finance Brokers (AFB) – had written to the Financial Services Authority (FSA) warning that brokers would fail if they are forced to deal with PPI claims without the financial support of the banks that originally manufactured the products.
Jimmy Saunders of Duff & Phelps explained: “It’s not the main enterprise. it’s a re-structuring exercise.
“There was a PPI liability but there were no assets.
“They had a small team of employees who were processing PPI claims and they have all been transferred.
“The rest of the business is perfectly profitable.
“We have been in dialogue with with the FSA and the Financial Services Compensation Scheme.”
Norton Finance said in a statement it was “with reluctance” Norton Finance (UK) was closed.
“However I am pleased to announce that Norton Finance and Mortgages has acquired the business and all employee positions will be protected,” continued the statement.
“We look forward to continuing to work with all existing introducers and partners.”