If you have recently applied for a loan and have paid an arrangement fee to your broker, but have not taken up the offer, then you are entitled to a full refund of this money, less a fee of Ј5.00.
The Office of Fair Trading (OFT) recently alerted consumers to the fact that if they are not found a suitable loan within six months and don't take up any loan offered - for whatever reason - the broker can keep only Ј5 of the arrangement fee.
On it’s website the OFT that: “The Consumer Credit Act limits a credit broker's charges to Ј5 if, following an introduction to a lender, an agreement is not signed within six months. If more than that has already been paid, brokers must refund the excess on request.”
According to the OFT, it has been found that some brokers are targeting disadvantaged consumers. The broker will get their fee up front (approximately Ј50) and only afterwards does the consumer find that the prospective credit provider will only lend them amounts less than they require or that loans are only available with a guarantor.
Understandably, the consumer may wish to reject the loan offered and many do but are not aware that they are entitled for a full refund of the arrangement fee, less a fiver.
People having difficulty obtaining a refund should contact their local trading standards service. Under section 155 of the Consumer Credit Act 1974 - which applies to a number of types of agreement including mortgages and consumer loans of Ј25,000 or less. - a credit broker may charge no more than Ј5 for its services if the consumer does not enter into an agreement within six months of an introduction to a lender. If the broker has already charged more than Ј5, the excess must be refunded to the consumer upon request.
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