Are payday loans brokers different to payday lenders?
Yes. Whereas payday lenders will lend cash-strapped people money directly, brokers will supposedly shop around on their behalf to find the best deal. If you google "payday loans" or "short-term credit" it's likely that many of the results will be credit brokers or "lead generators", not actual lenders.
Do they treat customers fairly?
I'm afraid not. So far this year more than 10,000 people have contacted the Financial Ombudsman Service (FOS) to complain about credit broking websites, more than double the number in the whole of 2013. In two-thirds of complaints the FOS investigated, the ombudsman agreed that the consumer had been treated unfairly.
What do they do wrong?
Lots of things, unfortunately. Many people who used them were tricked into it – they thought they were applying for a loan directly and didn't realise they were paying a middleman. Another common complaint is a broker taking a fee, often without permission, only for the loan never to materialise. In the worst cases the FOS has dealt with, consumers' banking details were passed to other credit broking websites and their bank accounts debited multiple times without warning.
What's being done about them?
The Competition and Markets Authority (CMA) is investigating the payday lending market and the investigation will include credit brokers. The FOS and Citizens Advice are both aware of the issues too.
What shall I do if they rip me off?
If you went to a broker and it charged you a fee but failed to find you a loan, ask for your money back. If it refuses to refund you, take your case to the Ombudsman. The FOS can investigate and order the broker to give you your money back. So far it's found that in the majority of cases, brokers refunded cash as soon as the Ombudsman got involved. The Ombudsman can be contacted on 0800 023 4567 or via www.financial-ombudsman.org.uk