'Credit brokers' pretend to be the actual lender and add hidden layer of extra fees, charity says

Credit brokers are preying on cash-strapped borrowers by "posing" as payday lenders and charging unexpected fees for organising loans, according to evidence compiled by Citizens Advice. The debt advice charity said consumers were being charged set-up costs of £70 on top of the expense of taking out a payday loan – and in some cases brokers were siphoning cash away from people's bank accounts without their clear permission. Citizens Advice warned that borrowers using a broker often believed they were dealing directly with a payday loan company because websites and texts from some brokers did not make this clear. Borrowers are then hit with an unexpected fee for arranging the loan. The charity analysed 490 complaints reported to it about credit brokers between June and July 2013.

Two fifths of cases involved the upfront fees charged by these "middlemen" firms. Of these, 58pc of cases involved people being hit with unexpected fees and the remaining 42pc involved "deceptive practices" – including people being charged a much higher fee than agreed, fees being imposed for services they never signed up to and firms pretending to be the lender at the other end of the chain instead of the go-between....Read more here