As if the payday industry hasn’t seen enough controversy, just as things are about to settle down with the new regulations being put into place on the 1st January 2014, a new spanner has to come along and mess up the clockwork. The payday broker.
This broker is a sort of middle-man who gets between the borrower and the lender and starts to charge exorbitant fees for the ridiculous service of helping people find a quick loan when they need one. With the payday industry booming as it is already, this broker seems to be a redundant feature in the first place when finding a short term unsecured loan from one of the many payday lenders in the UK doesn’t seem to pose a big problem to the general public on the whole.
The FCA (Financial Conduct Authority) has resorted to emergency action due to the increasing number of complaints from consumers to both their banks and the ombudsman as some brokers wantonly deduct huge sums of money from people’s accounts in lieu of fees. Not only that but the consumers find that as soon as they give their details to a broker, those details are, in many cases, shared with up to 200 other loan companies and brokers who in turn try to charge the client exorbitant fees and charges.
Take for example Mrs. McGee from Sussex who lives on unemployment benefits and wanted to take out a payday loan so that she could buy a new settee. This is her story:
“I put in my bank details as they said I had got the loan. But as soon as I submitted the final bit of information, it popped up that I had been declined. I felt that I had been conned out of my bank details, but I thought not much more about it.
But on Friday when I went to take some money out I found there had been two payments made of 67.88 pounds to My Loan Now and 59.99 to another lender. I went into the bank and they told me that six minutes after My Loan Now had taken the 67.88 pounds it attempted to take the money again but as I had nothing left it was rejected.”
The good news is that apart from the FCA taking drastic measures without waiting for long winded regulation to be passed, one bank is also jumping on the band wagon. NatWest has warned all its customers about payday brokers and their services. The bank has also black listed 20 broker companies that have been identified as carrying out unethical business practices.
For once the authorities, banks and payday lenders seem to be in agreement. This new breed of shark needs to be driven out of town.