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article imagePay day loan middlemen complaints double in UK this year

By James Walker     Aug 23, 2014 in Business
Earlier this week, the Financial Ombudsman Service in the UK reported how it had seen complaints about so-called "middlemen" to pay day loan providers more than double this year.
Designed to help customers find the best value loan for their needs, the middlemen often take hefty fees for themselves - alongside the often extortionate value of the loan that the user ends up taking. Sometimes people do not realise that they are on the website of a broker, and not an actual loan company, according to the FOS, leading to unexpected fees.
Some brokers can charge membership fees of up to £100 but the BBC highlights a case where customer details were passed onto 10 other sites, leading to a total owed amount of £700 to the brokers - plus the value of the loan to the actual loan provider.
Over 10,000 people have contacted the Ombudsman since January after finding their bank accounts "drained" by websites they were willing to give credit card details to, supposing that they would offer a reliable, cheap and good value service. The brokers insist that the public are generally happy with the services they provide.
In recent months, pay day loan providers have come under fire themselves. Big names such as Wonga have been slapped down for their advertising campaigns and others have been investigated for foul play. The sheer number of providers often confuses consumers, too: a quick internet search yields hundreds of companies, from the well known to smaller providers such as Pedro loans.
The Financial Ombudsman warns that many people using brokers to get the providers never actually receive the loan they take out but are still charged huge fees by the broker for an unprovided service. Many want to see up-front fees for brokers eradicated.
The BBC tried to reach Smart Loans, Secure My Money and Loans Zoo, some of the biggest broker sites, for comment but none wanted to comment. They did contact Paul Williams of Click4profit, the company behind Smart Loans, who reinforced that "most customers are satisfied with the service" but did offer refunds to any unhappy customers. No mention of fees is present on the Smart Loans homepage.
The Financial Ombudsman is continuing to watch and regulate the bloated pay day loan and broker market and is ready to offer assistance to those who need it. They also remind consumers that the majority of websites who charged customers without notifying them hastily refunded them in full as soon as they realized the Ombudsman was involved with the case.
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