Loan fee scams to be stopped by OFT

[PGH7447]

Dishonest loan firms that demand upfront fees for loans they have no intention of making will be closed down by the Office of Fair Trading (OFT).http://www.bbc.co.uk/news/business-13604411

[42man]

Excellent news...

[Michael Browne]

OFT announces package of measures to address concerns over credit practices

 

 

1 June 2011 The OFT today announced a series of measures relating to marketing and charging practices used by credit brokers and debt management companies in response to concerns about their impact on vulnerable consumers.

 

In addition to ongoing robust, targeted enforcement action, including the revocation of consumer credit licences where appropriate, the OFT is publishing two new pieces of guidance: on the standards it expects of credit brokers, and on debt management.

 

The OFT is also asking the Government to consider whether new legislation is needed to address problems in the sub-prime unsecured credit brokerage market, including a possible ban on upfront fees. These measures are detailed in the OFT's response to a super-complaint from Citizens Advice, published today.

 

The OFT estimates that 270,000 UK consumers paid an upfront fee to a sub-prime, unsecured credit broker in the last 12 months, typically between £50 and £70, on the expectation of being offered an unsecured loan. Complaints to Consumer Direct about these upfront fees more than doubled between 2008 and 2010.

 

The OFT's super-complaint response suggests a number of businesses in the sub-prime, unsecured credit brokerage market, have business models based on taking upfront fees for a service they are unlikely to provide. Consumers are often not introduced to a loan in exchange for the fee or are offered loans that are different from those they expected. The evidence suggests some brokers also often fail to pay refunds to consumers who are entitled to them.

 

The new credit brokerage guidance, published today for consultation, sets out:

 

• that consumers may have a right to a refund of the upfront fee, under general contract law, where no introduction to a lender is made, and
  
• that the OFT expects brokers, six months after introducing a consumer to a lender, to advise any consumer who has not entered into a relevant agreement of their statutory right to a refund of the upfront fee.
  

Read more:

http://www.oft.gov.uk/news-and-updates/press/2011/62-11

 

 

CAB evidence on cold calling for credit and up front fees charged by loan finder firms

 

Cashing in ( 270kb)

Edited June 1, 2011 by Michael Browne

[sillygirl1]

About time too.

[coledog]

My son can stung by one of these and we have completely failed to get the money back. An absolute disgrace. They con people into giving their bank details on the promise of a loan and then deduct a 'fee'

[42man]

Issue a letter before action giving them 14 days to refund and if they don't then sue them...

[paxon]

This should cover all sorts of loans correct?

 

What i mean is payday loans are upto this aswell.

[blowing bubbles]

I have just been conned by one of these companies, desperate situation and can ill afford the £49.99 they have taken from me. Any ideas as to how I might get this back, would my bank be able to assist? Thanks

[coledog]

I have just been conned by one of these companies, desperate situation and can ill afford the £49.99 they have taken from me. Any ideas as to how I might get this back, would my bank be able to assist? Thanks

 

Follow 42man's advice in previous post