UK to crack down on rogue credit brokers

The Office of Fair Trading announced measures against scamsters who often target loan seekers with poor credit histories through an aggressive campaign of cold calling and unsolicited text messages offering to find cheap loans.

However, when gullible customers sign up, the firms take upfront fees - of up to £300 - for loans they have no intention of arranging.

Firms which target consumers with a torrent of nuisance texts and cold calls promise to write off debts, pursue compensation and sell anything from a mobile phone to double glazing would now be against tough new measures aimed at protecting their would be victims.

Victims have been tricked into handing over bank details only to find that their money has been withdrawn without their permission.

In several cases, their details were given to other brokers and debt management firms.

Between 2008 and 2010, complaints about credit brokers more than doubled and, according to OFT estimates, more than a quarter of a million people have paid an upfront fee for a loan in the past 12 months.