THE NUMBER of people complaining of unfair loan charges has soared by more than 500% in the last year.

 

In 2014, cash-strapped Glaswegians submitted 226 complaints to the Financial Ombudsman Service about credit brokers, compared to just 34 in 2013.

The main reason is thought to be due to the number of brokers offering people help in finding a quick pay day loan.

In some cases consumers were charged up to £80 without receiving a penny in credit,while others found their accounts debited multiple times after crooked firms passed their bank details to other broking companies.

Speaking to the Evening Times, a Financial Ombudsman spokesman told of a single father who was looking for a small loan over Christmas.

The dad-of-two signed up to a broking website to help him find £300 credit, only to be charged £80 by the firm and not receive any of the cash.

Fortunately he was given a refund after contacting the watchdog who helped him claim back the charges.

People desperate for cash often confuse these brokers with actual loan companies, and sign up online without realising it does not guarantee them any credit.

They are then left angry and out of pocket to find their accounts debited by the firms.

Two thirds of the cases which were formally investigated by the Financial Ombudsman were successfully resolved, with the consumers receiving refunds.

Many companies automatically give customers their money back when they discover they are being looked into by the regulator.

Glasgow city council has slammed the charges, and are urging people to turn elsewhere if they are in need of credit.

City Treasurer Councillor Paul Rooney said: "If someone finds themselves having to consider an expensive payday loan, the last thing they need is a broker heaping additional and often completely unexpected fees onto their debt.

"This is a particular worry at this time of year, when money can be stretched, and I have real concerns about the way in which some of these businesses seem to operate.

"There are better and safer solutions for anyone who is struggling. The first step is to get money and debt advice - and, if credit is required, look to a local credit union or a community finance initiative like Scotcash."

A spokesman from the Financial Ombudsman service said: "It's disappointing that people who may already be struggling financially are being misled by these websites into thinking they'll definitely get a payday loan.

" Thankfully, in the majority of cases, the business running the websites refund the cash as soon as the ombudsman gets involved.

"If money has been taken from your account by one of these payday loan websites unfairly or without warning, the ombudsman is able to step in and get it sorted out. Give us a call and we can put things right quickly."

People are advised to contact the Financial Ombudsman on 0800 023 4 567 if they need help or advice on credit broking issues.