Fraud complaints against commercial finance brokers rise

Following the claims, the NACFB has warned brokers within the industry that fraud will not be tolerated, as the actions of a few could threaten the reputation of the whole sector.

The warning comes after reports that some brokers had been purporting to be lenders, or were charging large, up-front fees without actually ever intending to help fund a proposal.

NACFB chief executive Adam Tyler said that there had been an increasing number of calls to the association's head office from consumers complaining about certain brokers' tactics.

"The current difficult economic conditions have led some firms to demand large amounts of money for no guarantee of any kind of service from clients who are vulnerable because they are desperate for some kind of financial assistance," he said.

"The association takes a very dim view of these kinds of activities and is now forming a separate committee which will include members of the relevant authorities."

This committee will aim to investigate any reports of fraudulent activity within the industry, whether related to members or non-members of the NACFB.

It will also seek to decide how to ensure that any illegal practices can be stopped.

Tyler said this would include working with the police, the Office of Fair Trading (OFT) and government bodies.

He added: "I have taken a number of calls in the last few months from consumers that feel they have been effectively 'ripped off' by individuals and companies representing our industry.

"This is a throwback to the late '80s and early '90s and is threatening the reputation of all commercial finance brokers.

"I am concerned that a small number of incidences will undo all the hard work of the last two decades and could eventually bring about regulation. The amounts involved in up front fees can amount to thousands of pounds."