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Creditors payday loan middlemen debt advice

Published on August 19th, 2014 | by FinanceLoophole


Payday Loan Middlemen Warning

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Payday loan Middlemen complaints rising

Complaints about payday loan middlemen – so-called credit broking websites – have more than doubled in the past year, according to new figures from The Financial Ombudsman Service (FOS). The FOS said it has been contacted by more than 10,000 people since January 2014.

Some reported cases have said that they had found hundreds of pounds had been removed from their bank accounts without any warning.

As would be expected, the credit brokers have always insisted that most customers are happy with their services. This is something which does not seem to be the case given the increasing number of complaints received by the FOS.

Nevertheless, one debt charity is now calling for the up-front fees they charge to be banned.

Money drained from bank account

These loan broking services are supposed to help people find the best value loan for their needs according to their advertising. But the reality of the service they offer can be quite different, taking advantage of people who already have debt management problems. And they will often charge excessive fees to provide a poor service.

However, according to the FOS, many consumers are unaware that they are using a broker, rather than a loan company itself.

Because consumers do not understand who they are dealing with, they will happily enter their bank account details on their websites.

Unfortunately instead of receiving the expected payday loan, they will be charged a broker fee, or membership fees, or both of up to £100.

Once the details of the persons bank are in the system their banking details can often be passed on to other websites, resulting in some people being charged multiple times.

I one instance a charge of £70 was levied by ten different sites to one person. This resulted in a loss of £700 from their bank account.

Upfront fees banned

Many of those affected are already struggling financially. And many never actually receive the loan they need.

According to the FOS too many of the cases they sort out are for instances where no loan is provided and people’s bank accounts have been charged a high fee, often multiple times.

StepChange – The debt charity wants to see the practice of charging membershpip fees in advance made illegal.

StepChange says that the problem is getting worse and needs addressing and has asked the government to legislate against membership and up front fees.

The industry regulator, the Financial Conduct Authority (FCA), said it was aware of the Ombudsman’s report, but would not comment on any possible plans to investigate the sector.

Under rules published by the previous regulator, the Office of Fair Trading (OFT), credit brokers have to make their charges clear to consumers.

Refunds for unhappy customers

A recent investigation conducted by the BBC found they could not contact the most popular credit broking sites – Smart Loans, Secure my Money, and Loans Zoo.

Paul Williams, which owns Smart Loans, has previously said that most customers are satisfied with its service. but that he has offered to issue refunds to anyone who is unhappy.

Can’t pay payday loan help – debt management

If you are unhappy about the service you have received from a  payday loan middleman or credit broking website, or having problems paying off the payday loan, we can help.

Our website provides advice and guidance on what to do if you are having problems paying payday loans.

There is plenty of free advice out there to help such as StepChange, and you could also use a reputable debt management company to help you manage your debt better.

Get help now

Do not let the problems get worse – take action today!

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