The Royal Bank of Scotland has seen a surge in complaints from people upset about money taken from their accounts for fees charged by payday loan brokers.
According to the bank, payday loan brokers have made a reported 1million attempts to raid customers’ accounts in July, 2014 alone, successfully extracting £1.1million in total, out of an attempted £60 million.
Terry Lawson, head of fraud at RBS and NatWest, said:
“We’ve seen large numbers of customers incurring charges they don’t expect when using a payday loan broker since July this year.
“We are reaching out to customers to warn them of these fees and taking steps to block the transactions altogether, but these are sophisticated organisations. They are resourceful and more needs to be done at an industry and regulator level to protect customers who may already be in vulnerable situations.”
Financial Ombudsman calls for vigilance when it comes to “unscrupulous payday loan middlemen”
How has this happened?
Vulnerable customers seeking payday loans have wrongly believed that the middleman brokers offering to find them a potential payday loan deal are in fact the lenders. The Financial Ombudsman has received many cases wherein the customer has been charged for this service without even receiving a loan at the end of it.
The Financial Ombudsman Service have received approximately 11,500 complaints about credit broking websites. Common among complaints have been customers that have been charged without recognising the broker company, or assuming the charge to be a payment towards the originally-sought loan.
How do I avoid Credit Brokers?
By seeking financial advice before taking on a payday loan you may find a more suitable solution than the high interest-rates of further credit that you cannot afford.
If you take on a payday loan, it is essential that you research those available to you. Credit brokers are not necessary in the process; they do not lend money and act as a go-between, offering information that is easily available to you when seeking a payday loan.
The Consumer Finance Association (CFA), who set standards for payday lenders through industry improvements, said:
“Brokers do not lend any money – they are simply the middlemen.
“There is no need to pay a fee to arrange a loan. You can go direct to reputable lenders who have new rules that ensure they will be clear and up front about costs and they cannot make more than two attempts to collect your loan payments from your account.
“Many brokers have no such rules and will keep dipping into your account to take arrangement fees.”
Have you been charged by a Credit Broker without realising?
If you have taken on a payday loan, read the terms and conditions of the loan and repayments to ensure you know exactly where your payments are going. RBS customers have found themselves with charges that they don’t understand, unaware that they’ve accepted the terms and conditions of broker websites that allow the sharing of customers’ data to other third parties. As well as this, the conditions of fees are widely unmentioned.
Senior ombudsman for the FOS, 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.”