FCA: Tech firms play “vital” role in loan fraud battle
Tech firms have a “vital” role to play when it comes to battling loan fraud, the City watchdog has said, as it seeks industry support for its anti-fraud campaign.
Mark Steward, executive director of enforcement and market oversight at the Financial Conduct Authority (FCA) told Peer2Peer Finance News that loan fraud poses a risk to authorised finance providers such as peer-to-peer lending platforms, because “their existence undermines the societal trust that is necessary for markets to work well.”
“That’s why we regularly communicate with regulated firms about how the industry can support the battle against the fraud more broadly, in addition to the action we take,” he added.
“We also work with a range of partners, including legitimate lenders, that help to raise awareness of the dangers of loan fee fraud, the warning signs for consumers to look out for, and the importance of checking the FCA’s financial services register so that consumers can ensure they are dealing with an authorised firm.”
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Steward highlighted the role that tech companies can play in protecting consumers from online harm, and called on tech firms to work together with the regulator and the government to crack down on the growing trend of loan fee fraud.
“Tech companies have a vital role to play,” he said. “We want to see continued and concerted efforts by all organisations with an interest in protecting consumers to achieve a sustained reduction in scams.”
Steward’s comments followed a recent report from the FCA which found that loan fee fraud is on the rise, with cases up by 21 per cent compared to last year.
Loan free fraud is where a consumer pays a fee for a loan they never receive. Fraudsters will often pressurise consumers into making a fast payment for a non-existent loan.
“Anyone can fall victim to loan fee fraud,” added Steward.
“However, scammers and illegal lenders often target individuals with limited access to mainstream credit, and therefore a lower income or a lower credit rating.
“Typically, victims struggle to access credit and have already been declined a loan by several providers. They are then usually contacted by someone offering them a loan but told they need to pay a fee to access it. This can take form of text, phone, email or online, particularly social media.”
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