Ahead of Christmas, the regulator the Financial Conduct Authority (FCA) has launched a loan fee fraud campaign. The FCA points to its latest research that many borrow to cover the cost of Christmas, and loan fraudsters pose an increased risk to families.
The FCA found almost half of UK adults (47pc) feel pressured to spend above their means during Christmas to provide for loved ones, rising to almost two-thirds (64pc) for those with children under 18. Two in five (40pc) UK adults, and over half of those (52pc) with children under 18, are also concerned about being able to afford Christmas spending this year.
As a result, over a quarter (29pc) of parents have borrowed money, or intend to, for Christmas this year. The amount borrowed has increased by more than a third, from £305 last year to £412 this year. According to Debt Free Advice, a debt advice coalition, new debt assessments between December 2022 to March 2023 were 83pc higher compared to April to July 2023. The FCA says it’s concerned stretched households could be vulnerable. Loan fee fraud – where a consumer pays a fee for a loan they never receive – typically results, on average, in a £255 loss.
To combat what the FCA describes as a rising threat of loan fee fraud, the Authority is urging consumers looking for a loan to do a three-step check. It could be a scam:
-if you are cold called or emailed;
-or if you’re asked to pay an upfront fee;
-or if you’re asked to pay quickly or unusually.
If people are unsure whether someone offering a loan is properly regulated, they can find more information on an FCA loan fee fraud page, and search the name of the lender on the Financial Services Register, before applying for a loan.
This year, the FCA has partnered with Debt Free Advice, led by Toynbee Hall, to promote the support they provide those in financial stress debt.
Therese Chambers , Executive Director of Enforcement and Market Oversight, said: “Fraudsters will take advantage even of parents’ desire to give their children a good Christmas. Don’t let them. Remember the three-step check and protect yourself and your loved ones from loan fee fraud. If you are cold called or emailed, it could be a scam. If you’re asked to pay an upfront fee, it could be a scam. And if you are asked to pay quickly or unusually, it could be a scam.”
