2 March 2011
Last updated at 19:02 ET
Unscrupulous credit businesses are cashing in on people’s desperation for loans during tough economic times, a charity has said.
Fraudsters are making unsolicited offers to find loans for people before charging them hefty up-front fees, Citizens Advice said.
Loans often failed to materialise and victims were then charged a premium rate when calling to complain.
Citizens Advice has called on the fair trading regulator to intervene.
It has submitted a super-complaint to the Office of Fair Trading (OFT). The regulator now has to give a response within 90 days.
If the OFT thinks there is a case to answer, then it can decide to launch a full investigation in its own right.
‘Fertile’
Citizens Advice said that current economic conditions provided “fertile ground” for rogue credit businesses, with many households facing financial difficulties.
The charity said it had spoken to people in England, Wales and Scotland who had been ripped off.
They had received a text message or telephone call from a firm offering to find them an unsecured loan.
What is a super-complaint?
A designated consumer group can make a super-complaint to the Office of Fair Trading (OFT) if an issue is “significantly harming the interests of consumers”.
The OFT has 90 days to respond by stating what action, if any, it plans to take on the issue and the reasons behind its decision.
Those who accepted were then charged large up-front fees for little or no service in return.
Other victims were persuaded to hand over their bank details and later found that money had been taken from their account without their permission.
Victims struggled to complain, and found that, instead, they were being inundated by calls and text messages offering loans or debt management services from other firms.
Citizens Advice wants the OFT to ban cold-calling by credit or debt management companies, as well as an end to these companies demanding up-front fees.
“This problem is set to grow much worse,” said Gillian Guy, chief executive of Citizens Advice in England and Wales.
“The framework of consumer protection about unsolicited marketing and up-front fees charged by credit brokers is not only complex, but loopholes give too much room for bad practice to flourish.
“We believe that the Consumer Credit Act and data protection legislation need to be urgently updated to tackle these problems at root cause.”
Read the original post:
Rogue credit firms in spotlight