ABCUL (Association of British Credit Unions) is looking to raise awareness loan shark activity in the UK. The news of this credit union activity comes as a review by the Financial Conduct Authority has been published aiming to shed light on loan shark activities. While it concludes that there is no evidence that the FCA’s cap on payday lending interest rates has caused an increase in illegal money lending, there are some in society for whom such borrowing is “a way of life”.
All such borrowers initially find themselves in desperate need of short term funds and become embroiled in illegal lending where they can’t access funds elsewhere and have other social factors which cause them to be in contact with those linked to the criminal underworld. An estimated 310,000 households nationally are borrowing from illegal money lenders, many of whom charge exorbitant rates of interest to trap people into a spiral of debt.
Nationally, Illegal Money Lending Teams have secured more than 380 prosecutions for illegal money lending and related activity, leading to nearly 328 years’ worth of custodial sentences. They have written off £72.5 million worth of illegal debt and helped over 27,000 people.
In light of this news, credit unions have done their best to promote themselves as affordable lenders who are more ethical and safer to people’s financial wellbeing then loan sharks. Recently Bradford and District Credit Union (BDCU) and Stockport Credit Union have hosted events within their district in partnership with the illegal money lending team.
Collaborating with groups in fundraising, organising and promotional events help get the Credit Union known which increases awareness and membership.
Working with Incommunities (a local Housing Association) BDCU, hosted anti-loan shark awareness events to over 150 families at local community centres. Geraldine Howley, Incommunities Group Chief Executive said: “As the area’s biggest social landlord we are committed to actively engaging with families and customers who are looking for help to manage their budgets better. Running four community-based loan shark awareness sessions and signposting families to where they can get help through the IMLT. We also encourage our customers to become members of the BDCU and join nearly 1000 other Incommunities’ customers, many helped by a free £10 starter offer on opening an account”.
The Illegal Money Lending Team (IMLT) has also worked with Stockport Credit Union to host a Anti-Loan Shark event. The event attracted 37 guests from 28 different local agencies that deal with vulnerable people on a regular basis. Attendees learnt about the tactics used by loan sharks and the help and support available to victims through the services of the Illegal Money Lending Team.
In the Autumn Statement 2016, HM Treasury announced new arrangements for channelling the funds seized from illegal lenders under the Proceeds of Crime Act into the promotion of credit unions locally which will give a boost to this work nationally from 2018.
Matt Bland, Head of Policy at ABCUL, said: “Credit unions play a vital role in communities across the country steering people away from the dangers of illegal money lenders and providing safe, regulated and ethical lending to people from a range of background and financial positions. We were very happy to see the announcement on Proceeds of Crime Act funding in last year’s Autumn Statement and are working with HM Treasury to determine how the funding will work from next year.”