The chairman of the Student Loans Company offered to resign after graduates were sent “misleading” letters demanding repayment that appeared to have come from a debt recovery firm.
But Christian Brodie’s resignation was not accepted by Vince Cable, the business secretary, because he was relatively new to the post, it emerged today.
Since 2005 the SLC has sent around 309,000 graduates letters under the trading name Smith Lawson and Company in an attempt to recover money.
The Office of Fair Trading warned the company and government about the “misleading” practice in February – the same month Mr Brodie became chairman – because it “created the impression that debts had been escalated for collection by transfer to a third party”.
But the SLC refused to stop using the name, and it was only after the Financial Conduct Authority publicly sanctioned the payday lender Wonga in late June for similar tactics that the SLC agreed to stop using the Smith Lawson and Company name.
According to a written statement by David Willetts, the universities and science minister, released today, Mr Brodie then offered a “clear and unequivocal apology” over the SLC’s behaviour and tendered his resignation.
But Mr Cable did not accept his offer to step down. “The Secretary of State and I have confidence in his leadership of the Student Loans Company,” Mr Willetts said in the statement. “We are both clear that it would be unfair for Mr Brodie to take the blame for a practice that was nearly 10 years old, particularly as he had only been Chairman since he joined in February of this year.”
The statement said that the use of the Smith Lawson name had been approved by Labour ministers in late 2004 and “this approach had not been brought to my or the Secretary of State’s attention before the recent media coverage”.