It has been reported in the Guardian that The Financial Conduct Authority (FCA) has taken the emergency decision to deal with payday brokers after the increased number of complaints registered over the last year over unfair and unethical practises.
The facts from the FCA reveal that brokers have been making countless attempts at taking money from people’s account and is affecting some of the poorest families in the country. Some brokers offer services to find a loan for you they charge a fee of £50 to £75 for using this service but the FCA have found that brokers then share the person’s bank details with as many as 200 other companies which are likely to be more brokers and then they start trying to clear out people’s accounts.
The news from various media outlet’s have said the financial regulators have stopped seven payday brokers from accepting any more applications with a further three pending to be sanctioned also.
It has been mentioned by various banks such as Natwest and Barclays that the number of complaints have increased over the last year over accounts being raided by brokers leaving customers without money and worrying about what they can do which is affecting thousands of people up and down the country and the FCA want to put a stop to this.
In an unusual step, the FCA said the rules had been made without prior consultation because it considered that the delay arising from the time it would take to consult “would be prejudicial to the interests of consumers”.
It added: “The FCA also believes that enforcement action alone is not sufficient to protect consumers from the poor practices identified in the market.”
The rules will ban credit brokers from charging fees to customers, and from requesting customers’ bank details unless they comply with new requirements making it clear who they are dealing with, what fee will be payable, and when and how the fee will be payable.
The FCA barring down on payday loan brokers is the latest actions taken by the regulatory board to curb the industry and keep consumers safe.
The FCA has revealed that 40% of short term credit complaints were about brokers rather than direct lenders.
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