The new “credit broking and fees” policy will mean those middlemen who help arrange payday loans will be monitored closer and forced to change their current operation.
The new rules have been brought in following a large amount of complaints being made by consumer who felt they weren’t treated fairly by payday loan brokers.
According to the FCA, 41% of the complaints it dealt with since April 1st were in relation to credit brokers, with 81% of those being about online brokers fees.
Often brokers online will claim they can get consumers a loan by searching the market, however they take a non-refundable fee with no guarantee of finding a loan. This has lead to many people feeling like they have paid for a service they never received and the small print wasn’t explained fully.
New Payday Loan Brokers Rules
These new rules will will include;
- Customers must be informed how much the fees will be &who they will be dealing with
- All advertising must inform people the company is a broker, not a lender
- Brokers will not be allowed too charge a fee directly from customers or asking for payment details, unless they comply with FCA rules.
These new rules will be in effect from 2nd Jan next year and some believe it will force many payday loan brokers to leave the market altogether.
Economic Secretary to the Treasury Andrea Leadsom said:
“I welcome the robust action taken today which will clamp down on this appalling practice which is causing customers real harm.”
Payday Loan Broker Changes
The biggest change from these rules is likely to be greater transparency, however they will still be allowed to charge upfront fees, which will be non-refundable.
This will mean many customer will pay for the broker to look for a payday loan, even if they are unsuccessful in helping the customer receive a loan.