The Financial Conduct Authority (FCA) is combatting loan fee fraud in the UK as summer sees a peak in consumer borrowing. FCA launches a campaign to educate consumers on recognizing and avoiding scams.
Facts
- The FCA is taking action against loan fee fraud with a new campaign to protect consumers.
- The FCA advises consumers to be cautious about loan fee fraud as they seek to fund summer spending through credit.
- Research reveals that 24% of consumers plan to use credit for summer expenses due to ongoing cost-of-living challenges.
- 55% of consumers express greater financial concerns this summer compared to the previous year.
- Consumers’ heightened financial worries combined with increased credit reliance make them vulnerable to loan fee fraud.
- Loan fee fraud involves fraudsters contacting consumers, asking for upfront fees in exchange for promised loans that never materialize.
- The FCA receives numerous reports of loan fee fraud, with average losses per consumer ranging from £25 to £450.
- Complaints related to loan fee fraud increased by 26% last summer compared to the same period in 2021.
- Consumers engaging with unauthorized firms become ineligible for the Financial Ombudsman Service or Financial Services Compensation Scheme, resulting in unrecoverable losses.
- The FCA launches a ‘3-step check’ campaign to help consumers identify loan fee fraud, advising them to be cautious of unsolicited contacts, upfront fees, and unusual requests.
- Loan applicants are urged to consult the FCA Register to verify the legitimacy of loan-offering firms.
- Steve Smart, executive director of enforcement at the FCA, warns of enhanced vulnerability during summer spending and urges consumers to follow the 3-step check to avoid scams.
