Broker and lender Ocean Finance and Mortgages has seen losses soar after a £12 million hit from payment protection insurance claims.
Losses at the Tamworth-based firm rose to £14.1 million last year, up from £706,714 the year before, after the company was hit by a charge for alleged mis-selling.
Ocean – which is well known for having its own television channel – is among hundreds of companies caught up in the payment protection insurance (PPI) mis-selling scandal which is expected to set finance firms back by a total of £9 billion.
It is the fourth year in a row that Ocean Finance and Mortgages has been in the red and its workforce has come down from a pre-recession peak of almost 300 to 163.
The problems come on the back of falling interest income for the firm, as the mortgage sector continues to be hit by the recession.
However, chief operating officer Gareth Shilton said, in the directors’ report, that “all possible development opportunities” would be explored to protect the firm against the adverse economic climate.
It stated: “The business will continue to operate in a streamlined fashion. However, because the group has a strong liquidity position and because the group will continue to benefit from all of the steps taken to reduce costs the directors consider it is appropriate to prepare the accounts on a going concern basis.
“We believe that the group continues to maintain a very strong position in the marketplace and will be best placed to take advantage of this position when consumer confidence returns and when the marketplace eventually recovers.”
Ocean Finance and Mortgages is owned by US firm Springleaf Financial Services, which broke out of financial services giant American International Group (AIG). It was acquired in 2006, spelling a windfall for chief executive Paul Newey who set up the Staffordshire firm in 1991.
Mr Newey achieved notoriety when he nearly broke the bank at the casino in Birmingham’s Star City when he won £3 million and forced owner Stanley Leisure to issue a profit warning, wiping 12 per cent off its share value. Accounts filed at Companies House show the number of loan applications fell by eight per cent across the year, while fees and commissions fell by 11 per cent.
The number of loans originated during the year to December 31, 2011, increased to £19.1 million, compared to £16.9 million the year before. However, that remains significantly below the £35.6 million agreed in 2009.
The company, which said no dividend would be paid to directors, enjoyed interest income of £9.2 million across the year, down from £9.8 million the year before.