Credit, Collections & Insolvency News
Illegal lending loan sharks will face a fresh new crackdown today as the government announces new funding to tackle unlawful lending. Over £5.5 million will be spent to fund the fight against loan sharks, helping to investigate and prosecute illegal lenders and support their victims. 100,000 of money already seized from loan sharks will also be spent to encourage people in England at risk of being targeted by loan sharks to join a credit union, helping them to access a safer form of finance and get their lives back on track and for the first time in Northern Ireland a new education project will be created to raise awareness of the dangers of loan sharks and to support vulnerable communities
John Glen, Economic Secretary to the Treasury said “These nasty lenders are nothing more than lowlife crooks taking hard-earned cash from the pockets of the most vulnerable. Over 300,000 people are in debt to illegal money lenders in Britain and they need to know that we’re on their side. That’s why we’re taking the fight to the loan sharks and spending more than ever to support their victims.”
In total, £5.67 million of funding will be provided to Britain’s Illegal Money Lending Teams (IMLT) and bodies in Northern Ireland to tackle illegal lending – a 16% increase compared to the previous year. The money will be used to investigate and prosecute illegal lenders, and to support those who have been the victim of a loan shark. Since the Illegal Money Lending Team was established in England in 2004, they’ve made over 380 prosecutions, leading to 328 years’ worth of sentences, and have written off over £73 million of illegal debt, helping over 28,000 people to escape the jaws of the loan sharks. Similar teams operate in Scotland and Wales.
In Northern Ireland, the Consumer Council will lead its first ever education and awareness campaign to help prevent the most vulnerable from being bitten by loan sharks, and the Police Service of Northern Ireland (PSNI) will get funding for a specialised officer who will lead on illegal lending within the Paramilitary Crime Task Force.
Tony Quigley, Head of the England Illegal Money Lending Team, said: “Loan sharks are a blight on society and prey on vulnerable people who struggle to make ends meet. These criminals use callous methods to enforce repayment and victims are often subjected to threats, intimidation and violence. We will not tolerate this sort of criminal activity in our country and loan sharks who are caught flouting the law will be pursued and prosecuted.
It is important for people to realise that alternatives to borrowing from loan sharks are available if you are in financial difficulty. Loan sharks are never the answer and we strongly support credit unions who can provide a safe and legal alternative.”
StepChange debt charity has welcomed the Government’s announcement. In a statement, the company said there is an urgent need to support the 300,000 households identified by the Government as in debt to illegal money lenders. The wider issue of legal high-cost credit should not be forgotten, either. An estimated 1.4 million lower-income households turned to high-cost credit to meet day to day living costs last year. So the charity urges the Government to support action both on illegal loan sharks and on better alternatives to high-cost credit more generally, with a renewed commitment to ensuring people in financial difficulties have viable options that will put them on a more sustainable footing.
While increasing signposting to credit unions is helpful, the charity says that credit unions alone are unlikely to have sufficient capacity or resources to meet the full spectrum or scale of need. The Government needs to consider a wider framework covering those who may not be able to borrow from credit unions, as well as those who can. Solving the problem, and providing truly sustainable alternatives to both illegal and high-cost lending, requires additional Government support, and creative approaches such as those put forward in the charity’s recent report on better alternatives to high-cost credit.
Peter Tutton, Head of Policy at StepChange Debt Charity, said “Cracking down on the unconscionable activities of loan sharks is a very welcome step. It needs to be accompanied by a twin-track focus on the high-cost credit market more generally, to reduce the harm being experienced by vast numbers of households who are forced to borrow to make ends meet. Now is the time for the Government to explore creative, sustainable alternatives to meet the needs of financially vulnerable households.”
Extra funding to tackle illegal money lending a ‘welcome step’
Money Advice Trust comments on the Government’s announcement of more funding to tackle illegal loan sharks
The Government has today announced more funding to tackle unlawful lending and an increase in the amount of money seized from loan sharks to support those most vulnerable to their tactics.
The additional funding will be provided to the Illegal Money Lending Teams and bodies in Northern Ireland. £100,000 of money seized from loan sharks will also be spent to encourage people in England at risk of being targeted by loan sharks to join a credit union.
Joanna Elson OBE, Chief Executive of the Money Advice Trust said “The extra funding to tackle illegal money lending is a welcome step in targeting the activities of those who prey on the most financially vulnerable in our society.”
“With over 300,000 people in debt to illegal money lenders it is crucial that the factors that force people down this route are a focus as well.”
“For the thousands of households forced to borrow to meet day to day costs, alternative forms of responsible lending need to be explored along with further changes to high cost credit. We will continue to work with the Government and regulators on this area to further protect those people at risk of harm.”
