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Payday loans are controversial enough but now there's a new shark in town: the payday loan broker.
Do a Google search on "payday loan" and you'll inadvertently come across these companies. Some are upfront about their intermediary status while others will bury this not insignificant fact deep in the small print.
The Financial Ombudsman Service says there has been a huge increase in the number of people, many struggling financially, complaining that payday loan middlemen have drained money from their bank accounts without even providing them with the loan they were looking for.
In some of the worst cases the ombudsman has seen, consumers' bank accounts were debited multiple times without warning as their banking details were passed on by the broker they had actually contacted to other broking websites. In some cases, customers' bank details were shared with as many as 200 other firms, which then also attempted to levy charges against them.
NatWest says it has been inundated with calls from customers who reported having had money taken unexpectedly from their account. At its peak, the bank was getting more than 800 calls a day on the subject.
After further investigation, it turned out that many of these customers had applied for a payday loan six to eight weeks previously and had handed their details, including card and bank account information, to payday loan brokers.
The bank says these brokers are making as many as 1 million attempts every month to debit loan-arrangement fees, normally £50 to £75, from the bank accounts of customers who are often already in deep financial difficulty.
NatWest has warned all customers to think very carefully before using a payday loan broker service and told them always to read the terms and conditions.
However, the bank is doing its bit too: NatWest has identified and blacklisted 20 dodgy brokers and is working on clamping down on the rest.
Good for NatWest. Banks are all too often criticised for not protecting consumers so it's good to see one of the big high-street names taking action against rip-off merchants rather than simply leaving consumers to fend for themselves.
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