The FCA has issued warnings regarding a number of unregistered lending firms across the UK, suggesting customers avoid dealing with them.
Firms that want to offer consumer credit (that’s products like loans, credit cards, etc.) in the UK must be authorised by the FCA. Before you apply for any sort of finance – especially with a firm that you aren’t familiar with - the FCA recommends you check to find out whether or not a firm you’re looking to deal which is authorised by them first.
Clone firms and how to spot them
In particular, the FCA have warned against so called “clone” firms, which are fraudulent individuals or companies offering financial services in the guise of an authorised lender or broker.
In these circumstances, the fraudulent lender or broker would typically contact you out of the blue – either by cold-calling or emailing you. They may contact you under the name of a perfectly reputable company, and this is where these firms can catch some people out. The FCA recommend that if a lender or broker contacts you out of the blue, after you’ve had no prior contact with them, you should automatically be suspicious. A common tactic of the scammers, for example, is to ask for an upfront fee to “draw down” a loan that you’ve been approved for. You pay the fee and you never hear from the firm again.
Being wary of unregistered firms
Often, as these unregistered firms operate under the name of a completely reputable lender, you have to be vigilant if you have any suspicions. For guidance, below you can find some of the clone firms recently active as reported by the FCA.
- Loans to You - Home Improvement Loans
- Loans Expert Online - Finance Live
- Liberty Loans - Lowest Cost Loans
- Loan Deals - UN Loans
- Next Loans - Home Equity Loans
- Fundspoint - Secured UK Loans
- E-Lender - Authority Finance
For a full list of firms the FCA suggest you should avoid, whether that’s because they’re unregistered or reported to be carrying out suspicious activity, head here.
Are they who they say they are?
You may discover a financial service provider on the Financial Services Register as authorised, but in the case of clone firms, the service contacting you may not be all that it seems.
So, to double check this, the FCA suggest that you ask the firm for their firm reference number (FRN) and contact details. If they can’t provide this, is unlikely that they are a reputable financial service provider. A good way to counter this is to search for their name on the Register and call the number listed there – if they have no records of contacting you, it’s likely you were dealing with a fraudster.
The FCA will continue to post details of clone firms when they catch on to them, so it’s a good idea to check when you can if you are suspicious of a supposedly legitimate lending company. Remember, the FCA advises that you should always be wary of financial service providers that contact you out of the blue.
You can find more information on how to avoid unauthorised firms direct from the FCA here.
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