Are unauthorised lenders still a problem?
It's a sad fact that even in today's relatively strict regulatory climate, the team here at Choose Wisely here occasional reports of marketing communications, websites and phone calls originating from unauthorised lenders and brokers. We recently reported broker Adexec Loans and Financial Solutions to the Financial Conduct Authority (FCA), an unauthorised broker who'd used our address. There are clearly still people and companies out there seeking to pass themselves off as authorised firms in an attempt to exploit consumers. Let's be absolutely clear, any business or individual operating as a lender or broker whilst not holding the correct authorisation is illegal and such firms should be avoided at all costs.
What are unauthorised lenders?
Unauthorised lenders, illegal money lenders or loan sharks are firms who operate outside of the law and have not been authorised to trade by the UK's financial regulator, the FCA. They often target vulnerable people and charge extortionate rates of interest or demand upfront fees in exchange for arranging loans that never materialise. Borrowers are not be protected by any form of contract, terms or conditions and failing to make repayments on time could lead to threats, violence or the taking of valuable items such as passports or cash cards for security. Loan sharks have a reputation for frightening people by threatening prosecution or prison if they don’t repay their loans. This cannot happen; an unauthorised lender has no legal right to recover the debt.
Choose Wisely's simple 4-step guide to spotting an unauthorised lender
Here are some tips to help you protect yourself from illegal lenders:
- Check if a firm is authorised
Almost all financial services firms and individuals must be authorised by the FCA so the easiest way of protecting yourself against unauthorised lenders is to check if the firm you're dealing with is on the FCA Register. Simply visit the register, enter in the limited company name, the firm's trading name, the firm reference number or the website address and they should appear on the register. If they don't they're an unauthorised firm and should be avoided.
- Avoid cold calls, spam emails & text messages
Genuine, authorised firms will not cold call you out of the blue, they won't send you spam emails and they won't send you text messages promising to pay you a no obligation loan in the next few minutes. Remember: if it sounds too good to be true, it probably is too good to be true.
- Be wary of fees and upfront payments
Be wary of application fees and if a firm asks for the first month's repayment before paying out your loan, do not pay it. The vast majority of legitimate, authorised firms will not ask for any fees or repayments before you get your loan
- Always use a trusted website to find suitable lenders
Choose Wisely is fully authorised and regulated by the Financial Conduct Authority. Our firm reference number is 730574 and you can see our listing on the FCA register by clicking here. We conduct regular due diligence on every provider who features on our website and we will only feature authorised firms on our comparison tables. Price comparison websites such as CompareTheMarket.com and MoneySupermarket uphold exactly the same standards. So be sure to look out for unauthorised firms, do your checks before entering into a relationship with a firm you're not familiar with and remember folks, always Choose Wisely. Using Choose Wisely will guarantee that you're comparing fully licensed and authorised lenders, taking out the risk of simply finding lenders directly from a search engine. If you want a list of lenders to compare, a good place to start would be the Choose Wisely Eligibility Checker. This will provide you with a list of suitable lenders for you to apply to.