Upfront Fees For Loan Introductions – Know Your Rights

Debt Advice Foundation was one of two not-for-profit organisations/charities consulted by the OFT as part of its review of promoting and charging upfront fees for loans in what is known as the sub-prime market. Other organisations consulted included government departments and consumer bodies such as Which? and Citizens Advice.

The OFT was responding to a super-complaint from Citizen’s Advice regarding marketing and charging upfront fees for loans. The OFT estimates that 270,000 people in the UK paid an upfront fee to a credit broker, typically between £50 and £70, on the expectation of being offered a loan.

Despite making these upfront payments, often in response to an unrequested telephone call from a credit broker, people don’t receive the offer of the loan they expected or worse still are not offered any loan at all. The OFT also found that some credit brokers fail to pay refunds to people who are entitled to them.

If you have paid a fee to be introduced to a loan you need to know:

  • You may be entitled to a refund of the upfront fee if you have not been introduced to a lender,
  • If you have not entered into a relevant loan six months after the credit-broker introduced you to a lender you have a statutory right to a refund of the upfront fee (and your credit broker is expected to tell you this).