At 11 am on Friday, June 27, Wentworth MP John Healey and the Mayor of Rotherham, Coun. Ann Russell, will officially launch the new initiative against illegal money lenders across the Borough at Rotherham Town Hall.
It is hoped that the crackdown, which is being led by Trading Standards Officers from the Council in partnership with a specialist team from Birmingham City Council, will make significant improvements in the lives of local families and communities by offering alternative arrangements to those who are most vulnerable.
Margaret Statham, Trading Standards Manager for the Council, said: "It is obviously very difficult to say exactly how widespread the problem is but we have very good information that some of the most vulnerable members of our community are overcome by debt to illegal money lenders and are consequently living in fear."
She added: "Many people end up in debt with illegal money lenders having borrowed only small sums of money and ending up owing excessive amounts. They do not know where to turn and, as there is no legal way of collecting the debt, the lenders threaten violence to collect it. We do not want this sort of thing in Rotherham and the 'Stop Loan Sharks' initiative not only gives us the enforcement tools to deal with the illegal money lenders, it also provides advice and guidance to those people who need financial assistance."
Jacqui Kennedy, Director of Birmingham City Council's Regulatory Services, illustrates the scale of the problem with film of an actress portraying the experience of a 19-year-old woman who borrowed £300. She was initially told the loan would cost £690 to repay at the rate of £20 per week but when she defaulted after four weeks, £300 was added to the debt.
Even after she had borrowed £700 from family members to repay the debt she was threatened and physically attacked when she refused to pay off the debt of an ex-boyfriend. When she went to the police further threats forced her to move home.
Jacqui said loan sharks were also associated with illegal weapons, smuggled cigarettes and counterfeit DVDs and other goods. The removal of loan sharks permits victims to manage their finances more effectively and often results in a drop in reported crime.
To provide information about illegal money lending activities call 0300 555 2222; text “loan (space) shark (space) + Your Message” to 60003; or email stoploansharks@rotherham.gov.uk
Operating a consumer credit business without a licence is a criminal offence, which carries a maximum penalty of £5,000 and/or up to two years imprisonment. Additionally, the Office of Fair Trading (O.F.T.) can revoke licences, issue warnings and add conditions to licences where necessary.
The issue of money lending can cover a range of illegal activities including:
• licensed persons acting unlawfully (for example canvassing off trade premises)
• Unlicensed persons offering cash loans
In light of the serious nature of illegal money lending and the negative impact it can have on the well-being of vulnerable sections of the community the OFT set up a pilot project through Birmingham City Council Trading Standards Services. A team was established to investigate illegal money lending activity, investigate if a problem existed, and bring to justice those persons responsible.
Following the pilot, research commissioned by the Department for Business, Enterprise and Regulatory Reform (DBERR) identified the extent of the problem and the reasons why people use illegal money lenders. Subsequently HM Treasury announced an extension to the funding for the scheme up to March 2008. This continuation demonstrates Government’s support for the scheme. Additionally Government announced that the project would extend its geographical area to cover Leeds, Bradford, Liverpool and Sheffield.
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