Citizens Advice has seen a trebling in complaints about credit brokers who take cash from bank accounts and don’t even provide a loan.
Calls to the national charity’s Consumer Service about such practices by brokers have over trebled in July to September this year, compared to the same period last year.
The FCA has today announced new measures to protect consumers from harmful fee-charging credit broking practices.
Citizens Advice described this as a much needed step. Its chief executive, Gillian Guy, said: “Problems with credit brokers have trebled. People who are desperate for credit are being pushed further into financial hardship through broken promises and unauthorised charges. Some vulnerable customers are struggling to get to the next pay packet after being fleeced by these firms. The measures announced by the FCA today are vital for many consumers that have had awful experiences with credit brokers.
“Citizens Advice has been calling for these rip off middlemen to be totally transparent on services and fees. Our evidence shows on average people lost £118 in charges, rising to over £183 where more than one transaction is made. Only 3% were actually offered loans or had details passed to a lender. In one case 19 different firms had taken money.
“The FCA are right to impose enforcement action and new rules as this market needs a radical clean-up of bad practice. We are concerned about unacceptable marketing and the way customers data is traded. Many are struggling to get refunds as claims go ignored and people struggle to track down the companies involved.”