Payday Loan Broker Complaints Soar on 'Draining Accounts'

Credit broking websites, which apparently match consumers with the best available loans and interest rates for a fee, have received double the amount of complaints over the last year, said the Financial Ombudsman Service.

According to the watchdog, which helps resolve issues between customers and financial firms when all other communications and discussions have broken down, consumers reported their bank accounts being "drained" after opting for a loan through the payday lending broker.

Around 10,000 customers claim that they were misled into thinking that they were signing up for a loan, when entering their bank details, as they were unaware that they were using a broker, rather than a loan company itself.

The result was hundreds of pounds leaving their bank accounts before they'd even obtained a loan.

One of the worst examples that Fos revealed was of one woman who was charged £70 by ten different credit broking websites, which resulted in her losing £700 in the process.

"In too many of the cases we sort out, no loan is provided and people's bank accounts have been charged a high fee, often multiple times," said Juliana Francis, the senior Ombudsman.

Meanwhile, FoS revealed that most of the credit broking websites have since refunded customers the money as soon as it learned the Ombudsman was involved.