Money Wellness
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category iconmanaging your money
calendar icon09 Aug 2023

Don’t get caught out by loan fee fraud this summer

The Financial Conduct Authority (FCA) has warned people to be wary of companies that ask you to pay an upfront fee for loans this summer.

Loan fee fraud – when a company asks for fee upfront for a loan that’s never received - tends to peak in summer when lots of people look for ways to cover the cost of summer related spending, such as holidays, days out with the kids, eating out or new clothes.

FCA data shows that there was a 26% increase in complaints of loan fee fraud last summer compared with 2021.

That figure is expected to be even higher this summer with over half of UK adults being more worried about their finances this year than they were in 2022, with a quarter (24%) saying they plan to turn to credit or loans to fund additional summer spending.

The FCA says on average each victim of loan fee fraud loses £260 but it has seen companies ask for anything between £15 and £450, which is requested as a deposit, administration fee or insurance.

Fraudsters will also say payment is required upfront because you have bad credit history.


How can you protect yourself from loan fee fraud?

The FCA says if you apply for a loan, you should only deal with authorised firms. If you don’t, you’ll not be protected if things go wrong, and you could end up losing money.

  • Check the FCA financial register - NewRegister ( – to find out if the company you’re speaking to is authorised
  • Check that the company’s contact details match the details on the FS register
  • Always use the contact details on the FS Register rather than a direct line or email you’ve been given
  • If there’s no contact details on the FS Register or the company claims they’re out of date, contact the FCA on 0800 111 6768


How do genuine loan fees work?

Sometimes genuine, authorised companies will ask you to pay an upfront fee before getting a loan. If they do, they must send you a notice setting out specific information.

Before you get the loan, you’ll need to reply to the notice saying that you understand and agree with what it says.

The notice should include:

  • The name of the company as it appears on the FS Register
  • A statement that the company is acting as a credit broker
  • A statement saying if you need to pay a charge for the company’s services
  • The amount of the charge (or how it will be calculated)
  • When the firm will take payment from you and how you’ll pay it

Report a scam

If you’re worried about a potential scam or you think you might have been contacted by a fraudster, report it to the FCA.

You can call the FCA on 0800 111 6768 or use this contact form - Contact us | FCA

Avatar of Caroline Chell

Caroline Chell

Caroline has worked in financial communications for more than 10 years, writing content on subjects such as pensions, mortgages, loans and credit cards, as well as stockbroking and investment advice.

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