Sharp Rise in Debtor Complaints about Loan Brokers

December 4, 2014

A growing number of men and women in debt around the UK are seeing their financial difficulties added to by the interference of loan brokers, who in many cases take money directly from personal bank accounts without having provided any service whatsoever.

That’s according to a new set of figures on the subject compiled by the Citizens Advice Bureau (CAB), which provides guidance to people dealing with debt management issues in Scotland and the rest of the UK.

In fact, the charity describes its staff as having been “inundated with complaints” in recent months about supposed loan brokers who take cash from bank accounts despite never actually providing any sort of service or finding a loan for the individuals involved.

Describing the practice as “appalling”, the CAB has made clear that it wants to see the Financial Conduct Authority (FCA) clamp down on brokers who take money directly from personal bank accounts.

The issue has apparently emerged and affected hundreds of people in the UK this year, with the CAB saying the number of complaints on the subject it received between July and September amounting to a figure three-times higher than that recorded in the same period of 2013.

Gillian Guy, chief executive of Citizens Advice, explained that people whose financial positions are already difficult or even perilous are among those most likely to be impacted by the rogue behaviour of what are widely being seen as a new and unwelcome breed of loan broker.

“People who are desperate for credit are being pushed further into financial hardship through broken promises and unauthorised charges,” Guy said. “Some vulnerable customers are struggling to get to the next pay packet after being fleeced by these firms.”

“Our evidence shows on average people lost £118 in charges, rising to over £183 where more than one transaction is made. Only 3 per cent were actually offered loans or had details passed to a lender. In one case 19 different firms had taken money,” Guy said in a statement.

Summing up her own and the CAB’s general concerns, Guy said that data relating to would-be loan customers in the UK is being traded in worrying ways and many people who have had money taken from their accounts are struggling to get refunds or even to identify the companies responsible.

The market for loan brokers in the UK “needs a radical clean-up of bad practice,” she said.

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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