FOS sees huge rise in 'rip-off' payday middlemen

The Financial Ombudsman Service today reiterated its warning that people seeking loans should be vigilant about unscrupulous payday loan middlemen.

Related topics:  Finance News
Rozi Jones
29th October 2014
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As banks begin to warn of being inundated with complaints from people who say their accounts have been debited by these businesses, the ombudsman urged people to speak up as soon as they suspect something has gone wrong.

There has been a huge rise in the number of people contacting the ombudsman, many struggling financially, complaining that payday loan middlemen have drained money from their accounts, without providing them with the loan they were looking for.

In some of the worst cases the ombudsman has seen, consumers’ bank accounts were debited multiple times without warning – as their banking details were passed onto other credit broking websites.

The ombudsman said that since April 2014 nearly 11,500 people have contacted the ombudsman to complain about credit broking websites, almost double the number in the whole financial year 2013/14.

In the majority of cases, the businesses running the websites refunded the cash they had taken as soon as the ombudsman got involved, and in two-thirds of complaints it investigated, the ombudsman agreed that the consumer had been treated unfairly, while in the remainder of cases the fees had already been refunded.

The ombudsman has also found that many people using these websites thought they were applying for a loan directly and didn’t realise that they were paying a middleman and the loans would not materialise.

Senior ombudsman Juliana Francis said:

“It’s disappointing to see that more and more people are being misled into thinking that these credit  broking 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’ll help you quickly get things sorted."

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