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    • Former MSE Paloma
    • By Former MSE Paloma 1st Dec 14, 10:22 AM
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    Former MSE Paloma
    MSE News: Payday loan broker crackdown revealed
    • #1
    • 1st Dec 14, 10:22 AM
    MSE News: Payday loan broker crackdown revealed 1st Dec 14 at 10:22 AM
    A crackdown on unexpected fees charged by payday loan middlemen has been unveiled by the Financial Conduct Authority ...

    Read the full story:

    Payday loan broker crackdown revealed




    Click reply below to discuss. If you havenít already, join the forum to reply. If you arenít sure how it all works, read our New to Forum? Intro Guide.

Page 1
    • fermi
    • By fermi 1st Dec 14, 10:26 AM
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    fermi
    • #2
    • 1st Dec 14, 10:26 AM
    • #2
    • 1st Dec 14, 10:26 AM
    http://www.fca.org.uk/news/new-rules-will-protect-consumers-from-harmful-fee-charging-credit-broking-practices

    New rules will protect consumers from harmful fee-charging credit broking practices, says FCA

    Published: Today Last Modified : Today

    New rules have been introduced by the Financial Conduct Authority (FCA) today to tackle poor practice in the credit broking market which is causing serious detriment to consumers.

    The rules will ban credit brokers from charging fees to customers, and from requesting customers’ payment details for that purpose, unless they comply with new requirements ensuring that customers are given clear information about who they are dealing with, what fee will be payable, and when and how the fee will be payable. The rules come into force on 2 January 2015.

    Martin Wheatley, chief executive of the Financial Conduct Authority, says:

    “The fact that we have had to take these measures does not paint this market in a particularly good light. I hope that other firms will take note that where we see evidence of customers being treated in a blatantly unfair way, we will move quickly to protect consumers from further harm.”

    The new rules have been made without prior consultation because the FCA considers that the delay arising from the time it would take to consult would be prejudicial to the interests of consumers. The FCA also believes that enforcement action alone is not sufficient to protect consumers from the poor practices identified in the market.

    The FCA’s concerns relate to:
    • a lack of transparency, resulting in consumers often not realising they are dealing with a broker rather than a lender;
    • fees being taken without informed consent, for example where terms and conditions are hidden or misleading;
    • consumers being misled as to the purpose of giving their payment details;
    • firms passing on consumers’ details, including their payment details, without informed consent, to other firms who also take a fee; and
    • consumers facing difficulty in identifying the firm that has taken a fee, and in obtaining a refund from the firm or a response to their complaint.
    Today’s announcement is part of a package of measures which will also require credit brokers to:
    • include their legal name, not just their trading name, in all advertising and other communications with customers;
    • state prominently in all advertising that they are a credit broker and not a lender; and
    • report quarterly to the FCA listing their website domain names, if they charge fees to customers.
    Consumers will also have a 14-day right of cancellation where credit broking contracts are entered into as distance contracts, for example online.

    Over 40 per cent of consumer credit complaints received by the FCA relate to credit brokers, 80 per cent of which relate to firms who charge upfront fees. The FCA has also received relevant intelligence from consumer groups and others who are seeing increasing complaints from people who have had money taken from their accounts unexpectedly and often by more than one broker.

    The FCA is investigating a number of credit broking firms; seven firms have been stopped from taking on new business and, to date, three further cases have been referred for enforcement action.

    Notes to editors

    1. The key changes for credit brokers are as follows:

    Information notices and customer confirmation: a ban on credit brokers charging fees, or requesting payment details for that purpose, unless:

    the broker has provided an explicit notice to the customer (an ‘information notice’), setting out

    - the firm’s legal name;
    - a statement that the firm is, or is acting as, a credit broker (not a lender);
    - a statement that a fee will or may be payable;
    - the amount or likely amount of the fee;
    - when and how the fee will be payable; and
    - the customer has acknowledged receipt of the notice, and awareness of its contents (the ‘customer confirmation’).

    Each broker will have to send its own information notice, and receive its own customer confirmation, before being able to charge a fee. The information notice and customer confirmation must be on paper, by email, or in another durable medium, and the broker will have to keep records of them.

    Transparency
    : credit brokers will need:

    - to include their legal name (as it appears in the Financial Services Register) in all financial promotions and communications with customers;.
    - to state prominently in all financial promotions that the firm is, or is acting as, a credit broker and not a lender; and
    - in the case of fee-charging brokers, to notify the FCA quarterly of their domain names.

    Right to cancel:

    clarification that consumers have a 14-day right of cancellation and right to a refund where credit broking contracts are entered into as distance contracts (e.g. online).

    2. Policy statement 14/18: Credit broking and fees.
    3. On 1 April 2014, the FCA became responsible for approximately 50,000 consumer credit firms, including credit card providers.
    4. On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
    5. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
    6. Find out more information about the FCA.
    I'm a Board Guide on the Debt-Free Wannabe, Bankruptcy, Credit Cards and Loans boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com

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    IVA & fee charging DMP companies: Profits from misery, motivated ONLY by greed
  • jamesd
    • #3
    • 1st Dec 14, 10:56 AM
    • #3
    • 1st Dec 14, 10:56 AM
    This is not limited to payday lending.
    • Monkeyballs
    • By Monkeyballs 1st Dec 14, 10:59 AM
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    Monkeyballs
    • #4
    • 1st Dec 14, 10:59 AM
    • #4
    • 1st Dec 14, 10:59 AM
    Ok, I should start by saying upfront that 'I hate payday loan brokers' *spit* but...

    Many a time after someone asks on this forum for help and advice it quickly becomes apparent that no attention has been paid to the information stated even though it is plastered on the website and repeated in the T&C's box which they often have to tick to confirm they have read and understood anyway?

    What protection will consumers have in this instance?

    I personally feel that in many cases people just panic and these dirt bags take advantage and should be completely outlawed! After all, do you really need someone to send your details to hundreds of completely unheard of lenders before being accepted by one of the main three or four?

    MB
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    • fermi
    • By fermi 1st Dec 14, 11:08 AM
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    fermi
    • #5
    • 1st Dec 14, 11:08 AM
    • #5
    • 1st Dec 14, 11:08 AM
    Many a time after someone asks on this forum for help and advice it quickly becomes apparent that no attention has been paid to the information stated even though it is plastered on the website and repeated in the T&C's box which they often have to tick to confirm they have read and understood anyway?

    What protection will consumers have in this instance?
    Originally posted by Monkeyballs
    As said in the FCA press release, would now have to be an email or letter sent notifying the borrower of all the things required in the "information notice". And the borrower would have to reply with specific confirmation that they have received and agreed to that.

    Just a tick box or T&Cs on the web site, no matter how prominent, would not comply with the new FCA rules.
    I'm a Board Guide on the Debt-Free Wannabe, Bankruptcy, Credit Cards and Loans boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com

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    IVA & fee charging DMP companies: Profits from misery, motivated ONLY by greed
    • Consumerist
    • By Consumerist 1st Dec 14, 2:05 PM
    • 5,196 Posts
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    Consumerist
    • #6
    • 1st Dec 14, 2:05 PM
    • #6
    • 1st Dec 14, 2:05 PM
    As said in the FCA press release, would now have to be an email or letter sent notifying the borrower of all the things required in the "information notice". And the borrower would have to reply with specific confirmation that they have received and agreed to that. Just a tick box or T&Cs on the web site, no matter how prominent, would not comply with the new FCA rules.
    Originally posted by fermi
    I suspect brokers will comply by sending huge emails which will require forensic investigation to dig out the relevant and important information. They will rely on customers just not bothering to wade through it all.

    What's really needed, I think, is a summary box containing all the important information. It's not clear, from what I have read, that the format of the information provided will be customer digestible.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • fermi
    • By fermi 1st Dec 14, 2:15 PM
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    fermi
    • #7
    • 1st Dec 14, 2:15 PM
    • #7
    • 1st Dec 14, 2:15 PM
    From the FCA policy statement on the new rules the information notice must have:

    - the firm’s legal name
    - a prominent statement that the firm is a credit broker (not a lender) or, if it is both a credit broker and a lender, a statement that it is acting as a credit broker and not as a lender
    - a statement that a fee will, or (where relevant) may, be payable
    - the amount or likely amount of the fee and
    - when and by what means the fee will be payable,


    but


    The information notice may also include the firm’s trading name and contact details, but must not include any other information or statements.
    Last edited by fermi; 01-12-2014 at 2:20 PM.
    I'm a Board Guide on the Debt-Free Wannabe, Bankruptcy, Credit Cards and Loans boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com

    Free/impartial debt advice: National Debtline | StepChange Debt Charity | Find your local CAB

    IVA & fee charging DMP companies: Profits from misery, motivated ONLY by greed
    • Consumerist
    • By Consumerist 1st Dec 14, 3:11 PM
    • 5,196 Posts
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    Consumerist
    • #8
    • 1st Dec 14, 3:11 PM
    • #8
    • 1st Dec 14, 3:11 PM
    If enforced, this looks as though it could be a helpful step, then.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • MABLE
    • By MABLE 1st Dec 14, 6:42 PM
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    MABLE
    • #9
    • 1st Dec 14, 6:42 PM
    • #9
    • 1st Dec 14, 6:42 PM
    Surely used sensibly they can be a life saver but yet again lending to the financially uneducated and this is the result.
    • Alpine Star
    • By Alpine Star 2nd Dec 14, 3:15 AM
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    Alpine Star
    Surely used sensibly they can be a life saver but yet again lending to the financially uneducated and this is the result.
    Originally posted by MABLE

    Loan brokers don't lend to anyone.
    • SnowTiger
    • By SnowTiger 2nd Dec 14, 5:10 AM
    • 3,688 Posts
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    SnowTiger
    Surely used sensibly they can be a life saver but yet again lending to the financially uneducated and this is the result.
    Originally posted by MABLE
    "Uneducated". LOL.

    Payday loan brokers save lives. LOL.
  • jamesd
    Payday loan brokers save lives. LOL.
    Originally posted by SnowTiger
    That's not a laughing matter. The poster you were replying to was writing about payday lending, not brokers.

    The recently introduced restrictions on payday lending are likely to lead to the deaths of some people who would have been able to obtain credit for heating repairs or fuel that could have kept them alive this winter. Hopefully most in this situation will be able to obtain alternative emergency finance so the death toll will be low. If you didn't know it, low home temperatures are one of the leading causes of avoidable death in the elderly and the relatively mild winter last year significantly reduced the death toll. Payday loans are far from ideal for this purpose but they beat nothing.

    This more recent broker change that started this discussion doesn't seem likely to have that effect since it doesn't decrease the availability of credit.
    Last edited by jamesd; 02-12-2014 at 10:49 AM.
    • Alpine Star
    • By Alpine Star 2nd Dec 14, 11:11 AM
    • 1,259 Posts
    • 611 Thanks
    Alpine Star
    The recently introduced restrictions on payday lending are likely to lead to the deaths ...
    Originally posted by jamesd

    I can't believe I'm reading this.


    Payday loans aren't the cause of deaths through poverty. Poverty is caused by lack of income not credit. Although that's not to say that Payday loans don't cause deaths in themselves because they have.


    http://www.mirror.co.uk/news/uk-news/man-who-killed-himself-over-3909660


    http://www.dailymail.co.uk/news/article-2324769/Antony-Breeze-set-hounded-payday-loan-firms.html


    http://money.aol.co.uk/2013/04/16/young-man-with-debts-kills-himself/
    • SnowTiger
    • By SnowTiger 2nd Dec 14, 11:16 AM
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    • 2,701 Thanks
    SnowTiger
    That's not a laughing matter. The poster you were replying to was writing about payday lending, not brokers.
    Originally posted by jamesd
    Why do you think that?

    The poster didn't quote any text and this thread is about payday loan borkers. The clue is in the title: "Payday loan broker crackdown revealed".
  • jamesd
    Why do you think that?
    Originally posted by SnowTiger
    Because the poster wrote this:
    Surely used sensibly they can be a life saver but yet again lending to the financially uneducated and this is the result.
    Originally posted by MABLE
    And that looks more like a comment on payday lending than brokers specifically.
    Payday loans aren't the cause of deaths through poverty. Poverty is caused by lack of income not credit.
    Originally posted by Alpine Star
    It's both. One thing about heating is that the need is highest in winter but a low and level income doesn't adjust. So an unexpected cost or just difficulty building up the money to cover the higher costs over winter can be a problem, notably for those not on direct debit level billing schemes, who are more likely to be poor.

    But even so, payday loans are a bad tool compared to other things that we as a society could be doing to prevent or deal with the issues better.

    Although that's not to say that Payday loans don't cause deaths in themselves because they have.
    Originally posted by Alpine Star
    I agree. Payday loans have a large number of flaws, though extremely poor debt collection practices have been particularly troublesome.
    Last edited by jamesd; 02-12-2014 at 12:35 PM.
    • fairyclicks
    • By fairyclicks 11th Dec 14, 4:50 PM
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    fairyclicks
    It would be great if these sharks were the next to have to refund people for mis-selling! Unfortunately the crackdown didn't go that far though!
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  • im-lost
    That's not a laughing matter. The poster you were replying to was writing about payday lending, not brokers.

    The recently introduced restrictions on payday lending are likely to lead to the deaths of some people who would have been able to obtain credit for heating repairs or fuel that could have kept them alive this winter. Hopefully most in this situation will be able to obtain alternative emergency finance so the death toll will be low. If you didn't know it, low home temperatures are one of the leading causes of avoidable death in the elderly and the relatively mild winter last year significantly reduced the death toll. Payday loans are far from ideal for this purpose but they beat nothing.

    This more recent broker change that started this discussion doesn't seem likely to have that effect since it doesn't decrease the availability of credit.
    Originally posted by jamesd
    What complete and utter claptrap.
    • Rossim1985
    • By Rossim1985 2nd Jan 15, 1:32 AM
    • 81 Posts
    • 147 Thanks
    Rossim1985
    I personally feel that in many cases people just panic and these dirt bags take advantage and should be completely outlawed! After all, do you really need someone to send your details to hundreds of completely unheard of lenders before being accepted by one of the main three or four?
    MB
    Originally posted by Monkeyballs
    It's exactly that, complete panic! I don't consider myself a stupid person, I went to a good Grammar schoool and I work in financial services (insurance). I usually always check terms and conditions, yet I ended up using one of these credit brokers when I thought I was actually getting a loan back in 2012.

    I already had loans with the main 3/4 payday lenders, my credit rating was terrible and I just panicked! I was suffering badly from anxiety / stress at the time and my mind was not applying normal / rational thought processes. In the end I had to go to my parents for help, which is something I will never forget. I've never felt so ashamed and stupid.

    Fast forward 2 years and I'm 4 months away from being completely debt free, but I'm pleased to see the changes being made here and also with the cost caps on payday loans. I think one I paid off the total interest amount was more than twice the total value of the loan!!

    Hopefully these changes will put a lot of these companies out of business.
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