Payday Loans No Brokers

Brokers have carried their notorious reputation in the financial world, wherever they have gone and this doesn’t stop with payday lending. Brokers, in general are considered less trustworthy and a more risky affair as compared to dealing directly with financial institutions. This is one of the main reasons why payday loans no brokers are considered a lot more “legal” and trust worthy.

The recent debate circling around credit brokers, especially when it comes to payday loans and what the ways should be to tackle this problem. It has identified that there are a majority of people who don’t realize who they are working with, that would mean that many of the brokers do not provide sufficient credentials so as a result of that, the borrowers don’t know who these brokers are working for and what kind of fees they would charge. As a result of this, the Financial Conduct Authority has made it mandatory that brokers reveal all the required information about who the borrowers are dealing with and the fees payable before finalizing the loan. This law basically is working towards making the functioning more transparent rather than just limiting the fees.

There are certain frameworks which the law has made compulsory to abide by:

·         It has become mandatory to reveal their true name, as mentioned in the Financial Services register (not just their trading name) in all their communication with the borrower. This would include advertising through all forms of media including on ground communication.

·         There are certain brokers who act just as brokers and not as lenders. If that is the case, then the borrower has the right to know and this should be communicated by the firm beforehand. This would mean carrying a statement implying the same in clear terms.

·         The Financial Conduct Authority is still working on the exact cap on the interest or the fees charged, but the borrower should be communicated about the expected amount he would have to pay at the end of the loan including the fees and by when it will be payable.

·         If they apply via online or on the phone via a credit broker, they are entitled to 14 calendar days to cancel their loan and get a refund of their fees.

Why payday loans no brokers?

There are several reasons why you should be directly with dealing with a lender rather than going through a broker, especially in the case of payday loans because it is always more advisable to be closer to the source of the fund. Some of the reasons why this is more popular are because:

·         There have been allegations made by the banks where they claim that brokers in one month alone make almost close to 1 million attempts to remove money from people’s accounts and there are borrowers who have received almost 650 calls per day.

·         There are many brokers who exist in the market who are responsible for providing a service to the customer and that is how they position themselves but more often than not, they take a borrower’s credit card details and charge their broker fees which are, on an average, 70 pounds and don’t even bother securing a loan for the customer. This is one of the most common practices when it comes to payday loans brokers

·         Due to the lack of education on the part of the borrower, when he applies for a loan online, he is under the impression that he is directly engaging with the lender, but many a time their information is being passed on to third parties. This is because these are agents who are hired to ensure that the lender gets maximum customers and without much effort. As a result of this, a customer is not in control of his actions.

·         As a result of this third party affiliation, it has been noted that their credit card details are passed on to not just one broker, but could extend upto almost 200 brokers who have access to their personal information and can charge them their broker fee without even applying for a loan or without them even securing a loan.

·         The age group of these borrowers facing this crisis is usually between 18-40 on relatively low incomes. There have been cases where a broker fee has been charged by 10 brokers which have resulted in a total deduction of almost 700 pounds.

This situation is not improving as financial authorities are saying that the cases have more than tripled in the last six months and this has been on the rise.

The most common complaints to the financial Ombudsman have been the following:

·         Money being debited from their accounts without any prior permission.

·         Borrowers not receiving the loans they were after because they found a better rate of interest somewhere else or they found out that the lender who they are speaking to was bogus or weren’t regulated.

·         People using these websites or in other words, applying for a payday loan directly using the online services realized they were not in touch with the lender directly but the middlemen which most of these payday lenders ad employed.

It has been observed that most of the borrowers have received the money after complaining with the Financial Ombudsman. The financial Ombudsman needs to play a greater role than just solving complaints by educating the consumer about his rights and ensuring that these practices receive due attention at the right time. Borrowers need to be educated about these practices adopted by these lenders and should realize that is not advisable to reveal their bank account details online, as this can lead to severe malpractices. It is important the borrower understands his responsibility as a borrower and realizes the need for education, so that he doesn’t find himself in a vulnerable position again. This would mean keeping a check on the financial expenses to start with and doing thorough research when the needs for such loans arise. Taking the help of reputed financial institutions in deciding what the best option available is, would also be a good idea. There are a number of helplines that are dedicated to serve this purpose.