Since 2004 the Government have committed £16.5 million to tackling illegal money lending nationwide. Specialist teams operate across England and in Scotland and Wales. As well as identifying, arresting and prosecuting loan sharks, the teams are working with partners in the community to ensure victims get access to advice and support.
Last year, we launched the national hotline and the Stop Loan Sharks campaign on Direct.gov to warn against the dangers of illegal lending and to provide a clear and simple way to report a loan shark.
So far, the teams have:
Identified more than 900 illegal lenders, leading to more than 700 investigations;
Written off more than £30 million of illegal debt; (money that victims would have had to pay back)
Helped more than 10,000 people, including the most hard to reach individuals;
Seized and confiscated over £1 million cash;
Secured more than 150 successful prosecutions, with more in the pipelines; and
Secured more than 50 years in prison sentences, plus an indefinite sentence for public protection.
Government recognise that significant numbers of consumers are struggling with their finances. We believe that it is crucial that when people are in difficulty with debt they seek help as soon as possible. That is why Government have invested significantly in making expert financial advice freely available. We have supported a number of measures such as the FSA’s Money Made Clear website and BIS’s face to face debt advice project to help consumers keep control of their finances and manage their debt.
While we want to see fewer people taking on unsustainable amounts of debt, we recognise that even for people on low incomes access to credit can be vital, allowing them to respond to unexpected events or crisis. We are concerned that many consumers are unable to obtain credit from mainstream sources, leaving them with few options other than to seek credit from high cost lenders. Government are committed to providing a safety net for people in need who are struggling to find affordable credit. We have provided increased funds to community-based lenders such as credit unions to provide affordable loans and increased funding for the Social Fund which provides interest free loans to consumers at times of pressure or crisis.
We are keen to expand on our evidence base in this area and welcome the review that the Office of Fair Trading is currently conducting into the high cost credit sector. Their report is due out shortly and we will not hesitate to act if the review finds that further action is necessary to protect consumers.
Government acknowledge that there are concerns regarding the home credit market. The Competition Commission investigated the home credit market in 2006 and as a result required providers in the sector to adopt remedies to address the problems it identified, such as lenders being required to share data on customers payment records, being required to publish their prices on a website where customers can compare the prices of loans and lenders giving a fair rebate to customers who repay their loans early. We are also putting in place a number of further measures to give consumers a more informed choice and to encourage responsible lending, including bringing in new requirements this year for lenders to provide adequate explanations to borrowers and to assess their creditworthiness. Any further changes in this area will need careful consideration and we are seeking to expand on our evidence base before determining whether existing remedies are working or if further action is needed. The OFT is reviewing the high cost credit market and is due to publish its findings and recommendations shortly. Government have pledged to respond quickly to the review.