The Office of Fair Trading has announced tough new measures against rogue credit traders, who often target those with poor credit histories.
Cold calling and unsolicited text messages are just two of the ways these rogue brokers operate.
Gullible customers have been signing up, only to find there are up-front fees of up to £300 to be paid. Only later do they discover there is no loan available.
Worse still, some have seen payments taken from their bank accounts which were not authorised after being tricked into handing over bank details.
Between 2008 and 2010, complaints about credit brokers more than doubled and the OFT estimates more than a quarter of a million people have paid an upfront fee for a loan in the last year. Around 45% of them were never offered a loan.
More than a third of those offered a loan found they were being charged a higher interest rate or didn’t receive the type of loan they’d requested.
Whilst the OFT is urging the Government to ban up-front fees from brokers, warn rogue brokers of being closed down and forcing refunds if a loan is not agreed within 6 months, new powers have been granted to help track down these rogue brokers and impose fines of up to £500,00 on them
Telecoms and Internet firms will now be forced to reveal details of these ‘dodgy’ firms – information that has previously been very hard to obtain.