Smart Loans prompt outcry for payday loans fee

Consumers left out of pocket by credit broker Smart Loans, which charged upfront fees to source loans that were never received, have been told they can claim back their money, as it emerged the Financial Ombudsman has been deluged with hundreds of complaints about the firm.

Credit brokers have caused controversy by targeting cash-strapped borrowers searching for payday loans. Those using them are often unaware that a fee of up to £70 could be taken from their bank account for a "loan search".

Some even find they are hit with a string of fees when details are passed to other brokers, even though they have never received a loan.

Smart Loans, a trading name of Click4Profit Ltd, is the latest to come under fire from consumers who said they did not realise they would be charged for using the site.

Gary Miller was searching for a loan of a few hundred pounds, and didn't realise he was applying through a credit broker. "Next thing I know Smart Loans takes £68.50 from my account, despite my never receiving a loan. I've tried to contact this company but had no reply."

When he realised it was part of Click4Profit he got in touch with the parent company. "But they asked for a 'receipt'," he says. "I've never received any such thing."

Frank Reeves was searching for a loan of £100 and applied for this on several websites. "I was taken to various different websites after typing 'payday loan' into the search engine."

He decided not to take out a loan, but found that several sums had been taken from his bank account from different brokers, including Smart Loans.

A different, direct lender that does not charge any upfront fees, Smartloan, said it had received more than 1,000 calls in the past three weeks from consumers trying to contact this broker.

Rob Westbury, from Smartloan, said: "These callers are distressed and have been unable to contact the company that took the fees."

He added that consumers often applied for loans through a range of different names and websites, but Smart Loans was listed as taking the fee from their account.

The Financial Ombudsman Service said it had received hundreds of complaints about Smart Loans in the past couple of months.

"We've only just begun to investigate these. It's too soon for us to have reached a decision on what is going on here," said a spokesman.

Paul Williams, director of Click4Profit, said: "We provide a valuable service to our customers and the vast majority of the feedback we receive is extremely positive.

"For a small proportion of our customer base that have not found our service helpful we are happy to issue a refund."

He said customers can use either the contact form on the website smartloans.uk.com, email support@smartloans.uk.com, or call 0844 704 8622.

He said Click4Profit's membership sites were clearly marked and had contact telephone numbers and forms on them. "Customers should contact us via the contact details displayed on the site they used," said Williams.

Citizens Advice wants the FCA, which took over the regulation of consumer credit in April, to take a tougher stance with credit brokers.

The charity's chief executive, Gillian Guy, said: "Dishonest credit brokers are still posing as payday lenders to get their hands on people's cash. We need to see urgent action to stop devious credit brokers from misleading consumers."

A spokesman for the Financial Ombudsman Service said that there isn't a particular refund scheme for people who have unwittingly paid a credit broker. "But the complaints process is the same as for any other regulated financial product. Complain to the business first, then if that doesn't work, the ombudsman can step in."