£1.2 Million To Help Net Warwickshire Loan Sharks
Warwickshire County Council’s Trading Standards Service has welcomed new Government funding that will help ensure that it is Warwickshire’s loan sharks who feel the bite this Christmas.
£1.2 million has been provided to help continue fund the West Midlands illegal money-lending unit and establish similar units in other areas.
Mark Ryder, Head of Warwickshire Trading Standards Service said:
“Loan sharks often circle at this time of year, waiting to capitalise on the hangover from Christmas spending, which plunges many households deeper into debt.
We want to clamp down on this evil exploitation of vulnerable people and are urging any Warwickshire consumer who has information on the activities of these loan sharks to get in touch.”
The loan shark team that covers Warwickshire is one of two teams that together have investigated 200 suspected illegal money-lenders, revealed more than £2 million of debt, and helped around 1,000 victims of loan sharks. The West Midlands team, based in Birmingham, has opened investigation files on 96 alleged loan shark operations and reported 22 lenders for prosecution or caution. So far, three cases have resulted in prison sentences totalling almost six years.
Warwickshire residents wishing to alert the Trading Standards Service to the activities of illegal money lenders are urged to phone: 08454 04 05 06. If you are being threatened with violence, phone the Police.
Loan sharks are unlicensed lenders. They operate illegally and will lend money when nobody else will, but the interest will be very high and you may find it difficult to keep up the repayments. Mainstream banks and other lenders typically charge interest rates of between 5% and 17% a year whilst the loan sharks charge as much as 1000%. If you borrow £500 at such a huge rate, it will cost you an incredible £5000 in interest over a year. But desperate borrowers sign up because they fail to understand the figures or choose not to think about it.
If you struggle to repay the loan - and the chances of this are very high - the next thing you’ll know is that you’re taking out another loan to repay the first one. Then, perhaps you’ll take out another loan to repay the second loan and you just keep getting deeper and deeper in debt.
Loan sharks prey on the vulnerable. If you start to miss payments or fall short you are likely to find that the nice, helpful loan shark may turn nasty. He may physically threaten you or your family.
All of this is against the law, as is threatening you by letters or phone calls. If you find yourself in this position, you should complain to the police.
People experiencing saving and borrowing problems may wish to consider joining a local credit union. Credit unions aim to help you take control of your money by encouraging you to save what you can, and borrow only what you can afford to repay.
You may not be able to save every week or month or you may have a poor credit record. If so, a credit union may be more sympathetic to your needs than a large financial institution. Credit unions welcome irregular savers, and all savers usually get the same percentage dividend on their savings.
Credit unions are much cheaper to borrow from than loan sharks – the interest that credit unions can charge on loans is limited to 2% a month. So a loan of £100 costs no more than £2 each month in interest (26.82% APR).
If you require debt advice contact: Consumer Direct on 08454 04 05 06; National Debtline on 0808 808 4000; the Consumer Credit Counselling Service on 0800 138 1111; Citizens Advice; or your local credit union.
The Consumer Credit Act 1974 requires that most businesses that offer goods or services on credit or lend money to consumers must be licensed by the Office of Fair Trading (OFT). Trading without a licence is a criminal offence and can result in a fine and/or imprisonment.
The Act also requires certain credit and hire agreements to be set out in a particular way and to contain certain information.
Bank of England figures produced last month show that the amount of personal debt has risen to one and a quarter trillion pounds – 10.3% more than the same time last year. The charity Credit Action recently produced figures showing that, including mortgages, the average debt owed by every UK adult is £26,747 and Britain’s debt is increasing by £1 million every four minutes.
A recent survey of young people under 30 found that 29% of 16 to 24-year-olds said they did not know how to prepare or manage a weekly budget and 62% said if they got into money trouble or debt they would not be able to name any services they could turn to for advice. (See Credit Action website http://www.creditaction.org.uk