There are few bigger recent stains on the finance industry than the payday loans scandal, which exploited some of the poorest in society until the Financial Conduct Authority watchdog capped interest charges.
Now there are fears that the scandal is being repeated in the adult training sector, with loans for courses being given to people who are already financially vulnerable.
If a student is unhappy with their course and leaves then they are left without any qualification but still in debt to the finance company.
One student, Thomas Donson from Derby, joined an electrical course offered by New Trades Career, a trading name of Green 360 Limited.
Unable to afford the £8,000 cost of the course he was told that he could get a loan from its selected partner Caledonian Consumer Finance Limited – no other lenders were suggested to him.
Mr Donson estimates that the monthly loan repayments of £180 were more than his disposable income at the time but he was still approved for the loan at an interview.
“The woman doing the interview said that my other debts weren’t relevant, even though I had a £12,500 personal loan that I was paying off and my mortgage was £520 a month,” he said.
“The interviewer also said I didn’t need to worry about my car tax, or my £170 monthly council tax bill, and told me not to include my girlfriend’s phone bill even though it was me that was paying it.
“I absolutely should not have been given the finance, I couldn’t afford it.”
This might not have mattered if the course led to a qualification and a well-paid job, but that’s not what happened.
“I asked New Trades Career to rescind my contract after 87 days because the course was not as sold,” he said.
“I was sold this ‘platinum’ course, including getting a personal tutor.
“The reality is you get someone who’s been an electrician who may not be qualified as a tutor and it’s not your personal tutor, there’s a team of them.
“If I had a conversation with one tutor and rang back later I’d get someone else and have to explain the issue all over again.
“I felt that I was just left with a text book and told there you go, get on with it.”
The experience with New Trades Career led him to set up the support group Trades Course Complaints with another dissatisfied customer of the firm, former plumbing student Edd Dyett.
They have since been contacted by more than 400 students of distance learning providers, most of them formerly taking courses with New Trades Career.
Last month New Trades Career instructed law firm Astraea Group to write a “cease and desist” letter to Mr Dyett, accusing him of making baseless allegations likely to damage its reputation.
It’s worth saying that its reputation is already poor, with 71% of reviews on Trustpilot giving it the lowest one-star rating.
The lawyer’s letter warned Mr Dyett that he and Mr Donson would be personally liable for any defamation claims because Trades Course Complaints is not a charity or limited company.
“I’m being threatened with being shut down and silenced,” Mr Dyett told the Mirror.
Kate Briscoe, founder of the online consumer legal advice service Legal Beagles, says that her website has been on the receiving end of several similar defamation threats from New Trades Career or other trading names used by Green 360 Limited.
She considers that the letter sent to Mr Dyett amounts to a “strategic lawsuit against public participation”, or SLAPP.
These are notorious tactics described by the Solicitors Regulation Authority as “an alleged misuse of the legal system” designed to discourage scrutiny of matters of public interest.
“This absolutely amounts to an attempt to shut down the public discourse,” Ms Briscoe claimed.
She says that Legal Beagles has always faced down the threats from Green 360, including a bulk defamation claim citing around 13 different student posters and 57 posts.
Legal Beagles refused to delete the posts, unless the poster wanted a comment taken down, saying this would amount to “bleaching the reputation” of the training company.
Part of the problem is that this industry is not regulated by the Department for Education, standards inspectorate Ofsted, or anyone else.
“I could set up a training course in plumbing tomorrow,” said Ms Briscoe.
“I could download some instructions and videos and sell that as a course. The students would be on weak grounds when it came to challenging it if they were dissatisfied.”
She is calling on the Financial Conduct Authority to act to stop the “heartbreak” of young people borrowing large sums to pay for unsuitable courses.
“If you cannot regulate the training industry you should regulate the finance industry that supports it,” she argued.
“The FCA should look at the fact that, just like the payday lending industry, there is no way that affordability checks are being properly done. These are sub-prime lenders.
“The people signing up to these courses are either unemployed or in low-income work.
“None of these training companies would be functioning if they were not partnered with finance companies.”
A spokesman for the Financial Conduct Authority said: “We do not comment on individual cases, but we take all intelligence about firms’ conduct seriously and where we see harm, we take action.
“Borrowers who believe they have been unfairly treated can complain to the firm, and, if they are not satisfied, to the Financial Ombudsman.”
But there’s a problem with this, as Thomas Donson discovered when his complaint was rejected by the ombudsman. He believed the video of his assessment interview would show he was missold the course but, as I’ve reported before, New Trades Career refuses to hand over copies of the recordings.
The director of Green 360 Limited defended the quality of his company’s training.
“Our courses, materials and assessments are designed to obtain industry recognised qualifications,” said Ian Morris.
“Depending on the chosen course, successful completion will lead to an appropriate NVQ at either Level 2 or Level 3.
“We are pleased to report that each year thousands pass our exams.”
He denied using legal threats to try to shut down Trades Course Complaints, alleging that its co-founder Edd Dyett had made “damaging untrue statements concerning the business”.
“The letter sent to Mr Dyett is clear that, if he considers he has a genuine claim or genuine complaint to make, he should do so, and we would welcome the opportunity to have his concerns considered independently.”
James Ramsden of the Astraea Group also denied that his firm's letter to Mr Dyett amount to an attempt to stifle Trades Course Complaints.
"We are well aware of the issue of 'SLAPPs' and the potential chilling effect on legitimate research and journalism among other areas," he said.
"In essence, 'SLAPPs' are an abuse of the legal process, generally involving the threatening or bringing of meritless claims with a view to preventing publication on matters of public interest. Conversely, the bringing of legitimate actions (and pre-action correspondence in relation to same) to enforce rights and or prevent unlawful conduct is of course entirely unobjectionable. The letter on behalf of our client is clearly the latter."
Caledonian Consumer Finance did not reply to an invitation to comment.
*There's some useful advice from The Electrotechnical Skills Partnership and while it is aimed at people considering electrician courses the same guidance applies to other subjects.
Its Rogue Trainers campaign was launched to help people avoid training providers who do not offer industry-recognised qualifications and often leave people out of pocket without any prospect of becoming a fully-qualified electrician.
"Our advice to anyone looking to change career or spend huge amounts of money on a training course is to read the advice on the Rogue Trainers website and do not allow yourself to be forced into a decision without sufficient time to research what’s on offer," said a spokesperson.
It lists a number of red flags, including colleges that farm-out practical training to third party providers - you should check how good this provider is, where it has sites because the nearest might be far from where you live, and whether extra fees are charged for attending practical lessons.
Another red flag is the time limit put on courses. Many end after three years, but the Electrotechical Skills Partnership says if you start with no experience it takes around four years to become an industry-recognised qualified electrician.
investigate@mirror.co.uk
