Scammers looking to exploit financial stress at Christmas, FCA warns

• 40% of UK adults are concerned about being able to afford Christmas spending this year, rising to half of parents (52%) with young children under the age of 18.
• Over a quarter (29%) of parents with young children have already borrowed or intend to do so to cover the cost of Christmas this year, leaving many susceptible to loan fee fraud.
• Faced with this rising risk, the FCA sets out a 3-step loan fraud checklist to help consumers protect themselves.
• The FCA has also partnered with Debt Free Advice – a debt advice coalition led by Toynbee Hall, to help support those who are struggling with debt.

With Christmas around the corner, and scammers looking to exploit rising financial stress, the FCA has launched its latest loan fee fraud[1] campaign.

At a time of year when many households feel a festive squeeze on their finances, the FCA’s latest research highlights that many borrow to cover the cost of Christmas, and the increased risk that loan fraudsters pose to families.

The FCA found almost half of UK adults (47%) feel pressured to spend above their means during Christmas to provide for loved ones, rising to almost two-thirds (64%) for those with children under 18. Two in five (40%) UK adults, and over half of those (52%) with children under 18, are also concerned about being able to afford Christmas spending this year.  

As a result, over a quarter (29%) of parents have borrowed money, or intend to, for Christmas this year. The amount borrowed has increased by more than a third, from £305 last year to £412 this year. According to Debt Free Advice, the debt advice coalition, new debt assessments between December 2022 to March 2023 were 83% higher compared to April to July 2023.  

With financial pressure building and more looking to borrow, the FCA is concerned stretched households could be vulnerable to loan fee fraud.

Loan fee fraud - where a consumer pays a fee for a loan they never receive – typically results, on average, in a £255 loss.  

Protecting consumers from scams 

To combat the rising threat of loan fee fraud, the FCA is taking measures to raise awareness. The FCA is urging consumers looking for a loan to do the 3-step check to protect themselves from scams: 

• If you are cold called or emailed, it could be a scam. 
• Or if you’re asked to pay an upfront fee, it could be a scam. 
• Or if you’re asked to pay quickly or unusually, it could be a scam.  

If people are unsure whether someone offering a loan is properly regulated, they can find more information on our loan fee fraud[1] page, and search the name of the lender on our Financial Services Register[2], before applying for a loan. This will help identify any firms that are actively trying to scam consumers. 

This year, the FCA has also partnered with Debt Free Advice, a debt advice coalition led by Toynbee Hall, to promote the support they provide individuals experiencing financial stress and challenges with debt during this critical time of year. 

Therese Chambers , Executive Director of Enforcement and Market Oversight, said: “Fraudsters will take advantage even of parents’ desire to give their children a good Christmas. Don’t let them. Remember the 3-step check and protect yourself and your loved ones from loan fee fraud. If you are cold called or emailed, it could be a scam. If you’re asked to pay an upfront fee, it could be a scam. And if you are asked to pay quickly or unusually, it could be a scam.” 

Matt Dronfield, Managing Director of Debt Free Advice, said: “As Christmas approaches, families across the country face mounting pressure to keep up with societal expectations, often leading to increased debt and financial strain.” 

“Many of our clients are already burdened by the weight of utility bill debt, imposed by the ongoing cost of living crisis. Holiday-induced debt can have far-reaching consequences, affecting families' financial stability, mental health, and overall wellbeing.” 

If a consumer deals with an unauthorised firm, they will not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong.

Notes to editors 

1. The FCA’s consumer research was conducted by Opinium, with a nationally representative sample of 2,000 UK adults interviewed between 03-07 November 2023.  
2. Unless otherwise stated, all data refers to this survey.  
3. Debt Free Advice is a debt advice coalition led by Toynbee Hall, an anti-poverty charity in London. 
4. Find out more about the FCA[3].