The Financial Conduct Authority (FCA) has warned people to watch out for signs of loan fee fraud as they look to fund their summer spending.

Loan fee fraud, where a victim pays a fee for a loan they never receive, results in losses which average £260.

The FCA said this type of fraud peaks in the summer months and is growing each year.

Data from the regulator showed that there was a 26 per cent increase in loan fee fraud in 2022 compared to the previous year. The FCA said that people should be sceptical about any cold calls or emails and requests for an upfront fee.

The research also revealed that over half of adults are more worried about their finances than they were last year, citing the cost-of-living crisis as a major concern.

Additionally, the study found that around a fifth of parents are considering taking out a loan this summer to cover costs associated with having their children at home over the holidays or paying for back to school items.

Steve Smart, executive director of enforcement and market oversight at the FCA urged consumers to check that a firm is legitimate before applying for a loan.

“For many, summer brings with it the chance to relax and unwind but it also brings with it financial pressures - from holidays and festivals to funding days out, or out of term childcare for parents,” Smart added. “With inflation, energy costs, and rising mortgage bills, this summer spending will come at a time of enhanced vulnerability for many.

“For fraudsters, this provides the perfect opportunity to take advantage of people considering how to make ends meet over the summer months.”

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