FCA begins vetting loan brokers under new rules

The FCA has begun the process of vetting thousands of loan brokers at a time when complaints about the middlemen are soaring.

The role of authorising credit brokers has recently passed from the Office of Fair Trading to the FCA. Interim authorisation was granted to 5,247 brokers and since October 1 the FCA has been assessing the applications in detail.

Meanwhile, according to the Financial Services Ombudman, 11,405 people contacted it between 1 April and 30 September with complaints about loan brokers taking money from their accounts without providing them with the loan they were looking for.

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This compares to 6,376 calls between April 1, 2013 and March 31, 2014.

In some cases people were debited multiple times without warning as their banking details were passed onto other credit brokering websites.

Senior ombudsman Juliana Francis said: “It’s disappointing to see that people are being misled into thinking that these credit broking 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.”

In two-thirds of complaints the Fos investigated it agreed that the consumer had been treated unfairly, while in the remainder of cases the fees had already been refunded.

Adviser view

Alex Macdonald, of London-based GDA Financial Partners, said: “Such brokers have never had a great reputation and if there have been that many complaints one would expect the FCA would be looking at this.”