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Credit broker complaints rocket

28 Rhagfyr 2014

Complaints to Citizens Advice about brokers who raid cash from bank accounts and don’t even provide loans have rocketed. Calls to the Citizens Advice Consumer Service have more than trebled in July to September this year, compared to the same period last year.

In the first six months of this year Citizens Advice assessed over 1,500 cases of contacts with credit brokers. We investigated how people were contacted, the number of brokers taking cash and if people ever actually received a loan. We also looked at the amount of fees charged, whether consumers could cancel agreements and get refunds and how people had been helped by their bank. Citizens Advice finds:

  • Over a quarter (26%) reported that more than one broker had taken money from their account. In one case 19 different firms had taken money.
  • The average loss was £118 in fees, rising to over £183 where more than one transaction is made.
  • Only 3% were actually offered credit or had details passed to a lender.
  • Over four in ten (41%) who were not searching for loans had no idea how their bank details were obtained.
  • Nearly three quarters (72%) had searched for loans online.
  • In one in ten cases, personal and debit card details appeared to have been passed on by lenders.

Around a half (48%) of those cases we looked at attempted to get refunds from the broker and just one in five were promised a refund. Around a quarter (24%) asked their bank for help and in only 8% of these cases people successfully prevented money being taken from their bank accounts.

In December the FCA announced new measures to protect consumers from harmful fee-charging credit broking practices. Citizens Advice has described this as a much needed step, after it passed on a dossier of evidence to the regulator.

Gillian Guy, Chief Executive of Citizens Advice said:

“Problems about credit brokers have rocketed. It’s time for these rip off middlemen to be totally transparent on services and fees. Our evidence shows people lose £118 in charges, rising to over £183 where more than one transaction is made. In one case 19 different firms had taken money. Astonishingly, only 3% were actually offered a loan.

“Vulnerable customers are struggling to get to the next pay packet after being fleeced. People who are desperate for credit are being pushed further into financial hardship through broken promises and unauthorised charges.   

“We are concerned about unacceptable marketing and how customer’s data is freely traded. Many struggle to get refunds as claims go ignored and companies dodge customers. The FCA is right to bring in enforcement action, this market needs a vital radical clean-up of the bad practices that plague it.”

Notes to editors:

  1. Calls to the Citizens Advice Consumer Service have more than trebled: 393 complaints from1st July – 30th September 2013. The service received 1320 complaints from 1st July – 30th September 2014.
  2. In the first six months of this year Citizens Advice assessed over 1,500 cases of contacts with credit brokers – 1st January 2014 – 30th June 2014.
  3. This year the Citizens Advice service celebrates its 75th anniversary. We’ve planned a year of activity running from January to December 2014. Contact the press office on 03000 231 080, or via email at press.office@citizensadvice.org.uk, to find out more.
  4. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  5. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  6. To find your local bureau in England and Wales, visit citizensadvice.org.uk. You can also get advice online at adviceguide.org.uk
  7. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers
  8. Citizens Advice Bureaux in England and Wales advised 2.1 million clients on 6.6 million problems from April 2012 to March 2013. For full 2012/2013 service statistics see our quarterly publication Advice trends
  9. Citizens Advice service staff are supported by more than 22,000 trained volunteers, working at over 3,000 service outlets across England and Wales.