HM Treasury has announced it will be allocating new funding to tackling unlawful lending. Over £5.5m will be spent to investigate and prosecute illegal lenders, and support their victims. As part of the initiative, £100,000 already seized from loan sharks will be spent on encouraging people in England at risk of being targeted by loan sharks to join a credit union instead.
The National Association of British Credit Unions (Abcul) welcomed the announcement, which came on 25 April. Through the scheme, £5.67m of funding will be provided to Britain’s Illegal Money Lending Teams (IMLT) and bodies in Northern Ireland to tackle illegal lending.
Abcul’s head of policy and communication, Matt Bland, said that credit unions were working with IMLTs across the country to encourage local people to come to them before taking the dangerous step of borrowing from an unlicensed lender.
“The extra money to promote the role of credit unions will help keep more people out of the clutches of loan sharks,” he said. “But credit unions have a broader role to play in providing an ethical and affordable alternative source of credit and savings facilities than simply in relation to the fight against loan sharks. We look forward to continuing our work with HM Treasury, the wider government and the regulatory authorities to expand credit unions’ important role.”
He highlighted that, in “a timely intervention”, Gareth Thomas MP, chair of the Co-operative Party, recently convened a debate on capitalising co-operative societies. And the same week, the Lloyds Banking Group announced a further £1m for its Credit Union Development Fund, taking the total committed investment to £5 million.
Matt Bland said: “Figures so far show that the Lloyds investment has already had a 6-fold leverage effect in terms of new lending by recipient credit unions which stood at almost £12 million for £2 million invested in September 2016. This demonstrates how targeted capital investment can radically boost the lending capacity of credit unions in communities that really need it.”
The Illegal Money Lending Team was set up in England in 2004. Since then it has made over 380 prosecutions and written off over £73m of illegal debt. In Northern Ireland the initiative will be led by the Consumer Council, which will lead its first ever education and awareness campaign to help prevent the most vulnerable from being bitten by loan sharks. The Police Service of Northern Ireland (PSNI) will also get funding for a specialised officer who will lead on illegal lending within the Paramilitary Crime Task Force.
Loan sharks offer cash loans without giving paperwork, adding huge interests to loans and often threatening those in debt.
Tony Quigley, head of the England IMLT, 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. If you have been affected by illegal money lending, please call our confidential hotline on 0300 555 2222.”