Complaints about payday loan middlemen more than double in 2014

166

The Financial Ombudsman Service (FOS) has reported that so far in 2014 more than 10,000 people have complained about payday loan middlemen – credit broking websites – more than double the number recorded in the whole of 2013.

Credit broking websites are presented as tools to help people find the best loans, sometimes charging high fees to customers, who often do not realise that they are dealing with middlemen and not with loan companies.

The ombudsman reported of several people who had money drained from their accounts, sometimes without receiving the loan they needed and sometimes being charged multiple times as their bank details were passed onto other credit broking websites.

For instance, one woman was charged £70 by ten different sites, losing £700 in total.

Related Articles

    Senior ombudsman Juliana Francis said, “It’s disappointing that people who are already struggling to make ends meet are being misled into thinking that these websites will get them a loan.

    “In too many of the cases we sort out, no loan is provided and people’s bank accounts have been charged a high fee, often multiple times.

    “If money has been taken from your account unfairly or without warning, the good news is the ombudsman is here to help. Give us a call and we can put things right quickly.”

    The organisation added that for the majority of complaints, the websites refunded the customers as soon as the ombudsman looked into the incident.

    Payday loans have come under increased scrutiny in the UK and have been criticised because of their high insecurity, aggressive advertisement and high interest rates, which hit those with smallest income.

    The ombudsman said in July that complaints – mostly linked to poor service and administration – to payday loan companies had reached a new record.

    Photo: A McLin via Flickr

    Further reading:

    Payday loan complaints double in two years

    Wonga faces charges of £2.6m for impersonating law firms

    Financial regulator to investigate payday loan debt collection

    Lack of competition in payday loan market costing customers

    Payday loans to be capped at 0.8% to cut cost of borrowing