Ombudsman warns consumers about payday loan middlemen

The Ombudsman has spoken out about the websites that take hundreds of pounds from unwitting consumers on the promise of finding cheap credit, only for the loans never to materialise. Since the start of the year thousands of people, many struggling financially, have contacted the ombudsman complaining that payday loan middlemen had drained money from their accounts, without providing them with the loan they were looking for. In some of the worst cases the Ombudsman had seen, consumer’s bank accounts were debited multiple times without warning – as their banking details were passes onto other credit broking websites.

The Ombudsman said that so far this year (2014):

  • More than 10,000 people have contacted the Ombudsman to complain about credit broking websites, more than double the number in the whole of 2013;
  • In the majority of cases the business running the websites refunded the cash they had taken as soon as the Ombudsman got involved;
  •  And in two thirds of the complaints it investigated, the ombudsman agreed that the customer had been treated unfairly, while in the remainder of cases the fees had already been refunded.

The Ombudsman also highlighted that many people who had used these websites thought they were applying for a loan directly and didn’t realise that they were paying a middleman.

These figures were released by the Ombudsman today as it issued a detailed report on the handling of consumer complaints by payday lenders, highlighting the need for the sector to improve its business practices.

Senior Ombudsman Juliana Francis said: “It’s disappointing that people who are already struggling to make ends meet are being misled into thinking that these websites will get them a loan. 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. Give us a call and we can put things right quickly.