The Financial Ombudsman Service (FOS) has recently published a technical note on credit broking on its website. Credit brokers are companies that help people find loans and may sometimes charge an upfront fee for the service. FOS explains that it gets complaints from consumers that have been charged fees by one or more credit brokers when they have not actually taken out a loan.
The note sets out FOS’s approach to common complaints. Items of interest include:
- FOS often hears from people who have put their details into credit-broking websites. Some people did not realise they were not applying directly to the lender. FOS will check that the credit broker clearly informed the consumer whether it was a broker or lender, and whether it gave its legal name so people would know who to contact if they encountered any problems.
- FOS will check the information provided by the broker with respect to fees. If the fees were not made clear, FOS will usually tell the broker to refund them – whether or not the broker actually found someone a loan. If the fees were clear, but someone has not taken a loan, FOS will check the broker gave a refund in line with consumer credit law.
- Some consumers have informed FOS that several different credit brokers have taken fees from their bank account. FOS will check whether the broker made it clear that a consumer’s details may be passed on to other companies. If the broker did not make it clear, FOS might tell them to refund the fees taken by other credit brokers. If a fee taken by a different credit broker is not actually associated with the original broker, FOS will tell whoever actually took the fee to refund the customer.
- Many people who usually contact FOS about credit broking have wider financial difficulties and having fees taken unexpectedly can cause further financial problems and charges. FOS will usually tell the broker to refund any unfair or unauthorised fees and pay compensation for the trouble and upset they have caused.