Avoiding loan fee fraud.
The FCA is warning consumers about avoiding loan fee fraud.
The Financial Services Authority has issued a public warning after consumers lost three and a half million pounds in fraudulent loan applications last year.
The regulator says it has seen a big increase in this type of fraud, with the number of people complaints about such scams rising by 44 percent from 2016 to 2017.
These scams typically target those who are in distressed financial circumstances and looking for a short-term loan.
When searching for loan providers online, customers are contacted by an unregistered firm informing them that they have been approved for credit, provided they pay an upfront fee.
The FCA says some customers are persuaded to pay multiple fees, with the average loss being £740.
The regulator added that research shows that seven out of ten consumers (72 percent) had not heard of such lending scams. It urged people to check that a loan provider is authorized by the FCA.
An FCA officer said: In 2017 there were 4,700 reports of loan fee scams made to Action Fraud. It has now overtaken investment fraud as the most common scam reported to the FCA. Scammers often target the most financially vulnerable, on lower incomes and with poorer credit ratings.
This issue is somewhat complicated by genuine loan brokers charging a fee for their services, but fees are not normally paid upfront, other than the cost of a property valuation. Such brokers should be fully authorized with the regulator, and if the loan does not then materialize, consumers have a right to redress. StepUpLoans.co.uk and Step-Up Finance are fully authorized and regulated by the FCA (Register number 303044) and our details can easily be found on their website. All of our Lenders are also fully authorized, and therefore accountable.
Many thanks to the FCA for the information contained in this post.
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