FSA Cracks down on misleading Lenders
The UK’s financial watchdog, the Financial Services Authority, is coming down hard on a number of lenders that have been found to be duping consumers looking for finance through false advertising and questionable promotions. Dodgy brokers that have misled consumers in a bid to pocket more money in the way of commission have been targeted by the FSA, and already over one and a half million pounds has been collected in fines from a number of lenders.
 In addition to finding around a dozen lenders, the FSA has also warned hundreds of brokers that they need to change their advertising, or withdraw it altogether. This was because, according to reports, a number of brokers offering loan services were advertising far lower fees and commissions than they were actually taking, with some charging over two thousand pounds after advertising fees of between five hundred and fifteen hundred pounds.
Another problem that was identified by the FSA was consumers being directed to lenders that typically offered credit to bad credit consumers, which meant that even as good credit consumers some borrowers ended up with higher interest loans from specialist sub-prime lenders simply so that the broker could earn more in the way of commission. The FSA also picked up that some brokers and lenders were offering consolidation loans to clear smaller debts but which were costing the consumer even more than the other debts collectively.
The director of the Financial Services Authority stated: "Financial advertising must be clear, fair and not misleading. We need to see standards here rising - and fast." Consumers looking for loans are advised to be careful with regards to the company that they choose, and to ensure that the broker or lender is a reputable and regulated one. This can help to reduce the risk of ending up with a low value or inappropriate financial product.
Alisdair Milton
30th November 2006
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