RBS Seeks To Shut Down Payday Loan Brokers
Royal Bank of Scotland (RBS) has told Sky News it is actively working to close payday loan brokers.The group, which includes the Natwest and Ulster Bank brands in its stable, said that between July and August alone it was receiving 650 complaints a day from its customers about payday brokers.
It said one million attempts were being made a month to remove money from RBS or Natwest accounts and said that one customer of a payday broker who was seeking a £100 loan was charged £700 in fees.
Brokers are web-based and do not lend money themselves but often charge fees even if their attempts to find a lender are unsuccessful. Fees usually range between £50 and £100.
The Guardian reported on Tuesday that, in the worst cases, brokers have passed a person's bank details to others which then also attempt to charge the individual for a service.
Its story prompted the Financial Ombudsman to issue a new warning about the use of payday brokers, saying nearly 11,500 people had contacted the service to complain about credit-brokering websites since April alone.
In two-thirds of complaints it investigated, the ombudsman agreed that the consumer had been treated unfairly. Fees were refunded in the remainder of cases.
The ombudsman said many people using the websites thought they were applying for a loan directly and did not realise that they were paying a middleman and loans would not materialise.
Senior ombudsman Juliana Francis said: "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."
The Consumer Finance Association (CFA), which represents some of the best known payday lenders but does not represent brokers, said: "Brokers do not lend any money – they are simply the middlemen.
"There is no need to pay a fee to arrange a loan. You can go direct to reputable lenders who have new rules that ensure they will be clear and up front about costs and they cannot make more than two attempts to collect your loan payments from your account.
"Many brokers have no such rules and will keep dipping into your account to take arrangement fees."
Sky News revealed last month how the Competition and Markets Authority was changing the scope of its clampdown on payday lenders to include a greater focus on the brokers too.
Previous regulatory reforms within the short-term credit industry have included rules on capping daily rates and stricter advertising.
RBS Payday Loan