How to protect yourself from illegal lenders

Even in a time of more regulation and better protection for the consumer than ever before, there are still organisations operating in the short term credit market that are looking to exploit borrowers.

Companies operating outside of FCA regulation are typically based overseas and are using methods such as Email and SMS (text) marketing to lure unsuspecting people into false loan agreements and demanding up front payments in order for a loan to be released.

Consumers should also be aware of lenders that are still trying to lend either without permission from the FCA or with lapsed permission. If you accept a loan from an unauthorised lender you have no protection from the FCA and you may be subject to heavy penalties and fines being levied on your account from the lender should you fail to repay on time.

Here are some tips to help you protect yourself from illegal lenders:

    • Check the website of the loan company you are considering using carefully. Look for spelling and grammar errors – poorly constructed sentences or paragraphs or indeed a lack of text can be a sign of a rogue lender. Look at the words the website uses, do they make sense in the context of the sentence? Often websites that are built and operate from overseas use words that are either non-sensical or completely unnecessary. Whilst many legitimate lenders in the UK are based overseas, their websites are slick and professional and the text within them is always well written.

 

    • Look for the lenders FCA Interim Permission or Licence Number. A lender must display their FCA licence number on their website, you will nearly always find this at the footer of the homepage. The number should be 6 digits long. Of course, anybody can write a number down so the safest way to verify their status is to check on the FCA website. Recently, the FCA have updated their online verification process and it’s easier than ever to check a lenders registration status – you can do this by clicking here.

 

    • Never, ever pay a fee for a loan. If a company asks you to pay any money upfront in order for them to approve and pay out your loan you are almost certainly being scammed. Lenders in the UK will never ask for any money upfront. Rogue or bogus lenders usually ask for payments directly to a bank account or using services like UKash. If you make payments like this you will not be able to get your money back and you will not get the loan that may have been promised. If you have been contacted by a loan company asking for upfront payments, you should contact Action Fraud on 0300 123 2040 or report fraud online by clicking here.

 

  • Only ever use trusted websites to find a loan provider. We only work with regulated, legitimate lenders so you can feel safe knowing that we are only comparing genuine loan rates from genuine lenders.