Banks want action on payday loan brokers
The Royal Bank of Scotland Group have said that they're working to close payday loan brokers thanks to receiving 650 complaints-a-day between July and August alone. They say that there are 1 million attempts to remove money from account per month, and that one customer of a payday broker who was getting charged £700 in fees from a £100 loan.
The difference between brokers and lenders is that they don't lend the cash themselves, but rather, charge fees to people, even if they don't end up being approved for a loan. Worse still, is that some brokers will pass on your bank details to another party who will then also try and take money from your account.
The Financial Ombudsman have issued a warning about these payday brokers, after around 11,500 people had contacted them to complain about credit-broking websites. That figure comes from April alone.
In two-thirds of complaints the Ombudsman looked at, they agreed that the customer had been unfairly treated. They added that most people using brokers thought they were applying for a loan directly and didn't realise that they were actually giving money to a middleman where loans might not even be given out.
Senior ombudsman Juliana Francis said: "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."
Terry Lawson, head of fraud and chargeback operations for 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. Customers’ account or debit card details are gathered and sent on to up to 200 other brokers and lenders who charge them fees for a loan application."
"At its height we were seeing up to 640 calls a day on unexpected fees, but we’re pleased to say we’re seeing this decrease on account of the actions we’re taking to help stop these sharp practices."
There's been huge problems surrounding payday loans as a whole, so they're largely best avoided altogether. However, if you are desperate, be sure to read all the small print and make sure that the loan you're getting won't see you in more trouble than when you started off.
If you are having problems with anything regarding this, then contact the Financial Ombudsman here, or call 0800 023 4 567 on a landline, or 0300 123 9 123 if you are calling from a mobile. They'll phone you back, if you're worried about the cost of the call.