Target Newsletter - Issue 186 February 2023

Paradigm Compliance Update

FCA: Loan fee fraud Partner Toolkit

What is loan fee fraud? Loan fee fraud is when someone who is looking for a loan is asked to pay an upfront fee before receiving it. They pay the fee, but they never get the loan. The FCA say that there has been a 1,900% increase in searches for “no refusal payday loans*”. As a result the FCA are relaunching their campaign to protect people from loan fee fraud. Scammers target people who are looking for loans online. They will contact their victims, via cold calls, cold emails or social media platforms, to offer them a loan often pressurising people to pay an upfront fee quickly. Who is most at risk? The targets are usually financially vulnerable people: • Aged 25 to 45 (average age 37) • Male 60%, female 40% • Working in manual occupations or unemployed What are the FCA doing about this? The FCA’s campaign launched in January 2023 and will be promoted through partnership and search advertising activity. The aim is to go through a 3-step loan fraud checklist to help people protect themselves, with the key messages.

Graeme Stewart Head of Consultancy Paradigm Consulting

Introduction The FCA has recently published their “Loan fee fraud Partner Toolkit” launching their campaign to tackle this issue. In addition the FOS has also recently published their update on the support and assistance they can offer to clients who have been affected by a fraud or a scam if they feel that their bank or financial provider hasn’t done enough to help them. PARADIGM COMMENT Paradigm believes that firms will want to update themselves on this issue to create awareness with their clients and to offer support and guidance to them on protecting themselves from loan fee fraud and how they may complain, if they have been subject to fraud and believe that their own bank or financial provider hasn’t done enough to help them.

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