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ombudsman news


featuring questions raised recently with our free, expert helpline for businesses and advice workers

Don't the new consumer credit rules just apply to payday lenders?

No - they apply to all businesses authorised to by the Financial Conduct Authority (FCA) to provide consumer credit, loans or debt services. This includes around 50,000 businesses that were previously licensed by the Office of Fair Trading (OFT) - from catalogue retailers and pawn brokers, to home credit providers and logbook loan companies. And as well as the new part of the regulator’s handbook - the consumer credit sourcebook, or “CONC” - businesses will still need to follow any existing codes of practice.

Unfortunately, we’re hearing from the consumer advice sector that many people are running into problems with consumer credit - particularly where the lender has passed the account to a debt collector. We expect businesses to treat customers in financial hardship sympathetically and positively - as soon as they become aware of the problem.

It’s also important that businesses understand the rules about signposting customers to debt-management organisations, and displaying risk warnings in financial promotions.

I'm a consumer adviser offering debt advice. After the FCA's rule changes, the ombudsman can now consider complaints against me - should I be worried?

It’s true that we can now consider complaints against debt advice agencies such as the Citizens Advice Bureau and members of Advice UK. We would be able to look into things if a consumer felt that they had received incorrect advice.

But services like these occupy a unique position within the advisory landscape, as they operate as not-for-profit organisations and offer free advice. To recognise this, these organisations won’t be charged a case fee for complaints we receive against them - even after the usual limit of 25 cases.

If you’re is worried about the changes to our rules, or have concerns about how you’re affected, feel free to contact the technical advice desk on 020 7964 1400, or tweet @financialombuds.

I’m trying to help a client who says they’ve been ripped off by a credit broker. Is that something you can get involved in?

In most cases, yes. Credit brokers are businesses that search for lenders on a consumer’s behalf. They charge a fee to do this - which applies whether or not the consumer goes on to borrow any money. We’ve been hearing from a growing number of people that things haven’t worked out.

We know some credit brokers offer to refund fees if a consumer can’t find a loan - but usually only after three or six months, and only if the consumer requests it in writing. In our view, it’s fair that the consumer is refunded as soon as it becomes apparent that they’re not going to get a loan. It’s also important that brokers make sure they’re giving clear information about when and how fees are charged - so consumers aren’t surprised when the money’s taken from their bank account.

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ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.