Loan sharks could cash in following caps on payday lending, according to the Citizens’ Advice Bureau.
Caps limiting the interest rate and fees instated by so-called payday lenders have been introduced by the Financial Conduct Authority in a bid to protect people struggling with debt.
As of Friday, January 2, companies such as Wonga – who previously had annual interest rates higher than 5,000 per cent – must comply with regulations that will see interest and fees capped at 0.8 per cent per day.
Under the new rules, the total cost of a loan will be limited to 100 per cent of the original sum and default fees will be capped at £15.
While the move has been welcomed by the Darlington Citizens Advice Bureau (CAB), the organisation has warned the changes may cause more vulnerable people to fall prey to loan sharks.
Darlington CAB’s Dawn Gill expressed fears that loan sharks could take advantage of those now unable to access as much money as they need.
“Caps are a good thing but clients will still want money from somewhere – they’re being protected from high interest rates but companies may not lend as much.
“They may not be able to get as much as they were expecting or anything at all.
“We haven’t seen it happen yet but the changes are still new and it’s a worry.”
Ms Gill urged payday lenders to work with CABs in order to help their clients manage their finances.
“The ideal situation would be for payday lenders to refer their clients to us before they take out a loan at all and let us help them to maximise and manage their income.
“I’d advise people to come to us and let us help them find ways to manage.
“We can help with benefits, cutting energy bills or working out incomings and outgoings and priorities.
“There are a lot of people prioritising paying back intimidating people who knocked at their door with money rather than paying their rent or council tax but they could end up losing their home.”
To anonymously report a loan shark, contact the Illegal Money Lending Team by emailing firstname.lastname@example.org
or calling 0300-555-2222.
Source – Northern Echo, 20 Jan 2015
A community bank in Middlesbrough town centre to challenge pay day lenders has been recommended by council chiefs.
A new community bank to be based in the heart of Middlesbrough is at the core of Labour mayoral candidate Cllr Dave Budd’s campaign to secure the position in May, when current Independent Mayor Ray Mallon will step down.
Deputy Mayor Cllr Budd, Executive member for finance and governance, has recommended in a report to be put before the Executive on Tuesday that Moneywise Community Banking be provided with a two-year grant totalling £85,000 to support its plans to locate to a town centre premises.
It aims to help over three years 4,000 new members, provide 1,200 training courses and issue loans amounting to just over £0.5m.
A loan from Moneywise of £300 with a typical APR of 26.7% over 12 months, the total repayable amount would be £342.79.
In comparison, the council report states the same loan from a doorstep lender (APR 272%) would cost £546 to repay; from an online instant loan (APR 1058%) it would cost £627.54 to repay; and from an illegal lender or loan shark (APR 1000%), it would cost £2,900 to repay.
Moneywise Community Banking – a not-for-profit member owned credit union – will deliver a number of financial support services including safe and easy savings; an optional Visa debit card service; low cost loans; Christmas savings club; white goods and furniture at discounted prices; free employability training; and debt and money management advice.
It was originally based in Hartlepool and now operates across Teesside, East Durham and North Yorkshire with offices in Redcar, Hartlepool and Scarborough. It is regulated by the Financial Services Authority and the Prudential Regulation Authority, which is also the case with banks.
All member savings within Moneywise are fully protected by the Financial Services Compensation Scheme so members can save safely in the knowledge that they cannot lose their savings, the report said.
Cllr Budd has said previously that a “modern, effective” credit union for Middlesbrough has to be “competitive and give an instant answer like companies such as Wonga do”.
“This has worked elsewhere and it can work in Middlesbrough. It will offer credit at fair rates and gives all Middlesbrough residents the opportunity for greater financial security.”
The report states that the two-year £85,000 grant would be funded through existing resources within the Community Support Fund.
Moneywise and Middlesbrough Council would work together to identify suitable premises.
Source – Middlesbrough Evening Gazette, 14 Jan 2015
A vicious loan shark who threatened to break a terrified woman’s legs and cracked a man over the head with a police baton has been taken off the streets.
Waiter turned illegal money lender Joaquim Lara Alves Boal charged vulnerable people “extortionate” interest rates and turned nasty when debtors struggled to keep up repayments.
The 52-year-old was jailed for 28 months at Teesside Crown Court yesterday after his two-year reign of terror was brought to an end.
The court heard how Boal had made 34 loans to customers in Hartlepool totalling £7,000 and he expected to see a return of £10,000 by charging borrowers 20 to 25 per cent interest per £100.
But when one woman who had borrowed £600 struggled to keep up repayments, Boal threatened to smash her windows.
“She continued to pay him through fear,” prosecuting barrister Simon Mortimer said.
And due to Boal’s inept record keeping the woman ended up paying back twice what she had borrowed.
When another woman, who borrowed £700 from Boal, asked to see records of what she had paid back, Boal was unable to produce them.
He later approached her at Hartlepool Marina and produced a metal extended police baton and wanted her mobile phone as security.
Boal started to walk away, but turned round and said: “If you don’t pay, this is what will happen,” before slamming the baton against the railings.
“The victim was hysterical and very frightened,” said Mr Mortimer.
A third victim told investigators how Boal tried to crack him over the head with the weapon in Morrisons supermarket. He missed but struck the victim on the elbow.
Earlier, Boal had gone round to his house and began ranting and raving about money he said he was owed.
When the man would not go to the door Boal broke the window with the baton.
After the attack in Morrisons, police searched Boal’s Lancaster Road home and seized a notebook detailing some of his loans.
A second notebook referred to by witnesses was not found so the true extent of Boal’s lending is unknown.
The business had about 20 customers and had been operating for around two years.
Boal, who was born in Angola and came to the UK in 1990, told police threatened to break one of the female victim’s legs “to show he was serious”.
He pleaded guilty to three counts of illegal money lending, one of money laundering, two of blackmail, actual bodily harm and criminal damage.
Jim Withyman, mitigating, said Boal, who had no previous convictions, had fallen into illegal money lending after loaning colleagues cash as a favour.
He said: “He completely overstepped the mark.”
Judge Simon Bourne-Arton said: “Anybody who borrows money from loan sharks in the street is a vulnerable individual and these were vulnerable because they had no other recourse other than to go to people like you.
“Twenty per cent interest is an extortionate rate.
“You embarked upon a course of conduct which was threatening, threatening violence, intimidatory and bullying.”
Source – Hartlepool Mail, 21 Aug 2014
Tenants in privately rented accommodation across Darlington are being urged to avoid using loan sharks as part of a new campaign.
The England Illegal Money Lending Team, which works in partnership with Darlington Borough Council trading standards, has launched a month-long campaign highlighting the alternatives to using a loan shark.
The scheme aims to help tenants who may be in debt after struggling to pay deposits or keep up with rent payments.
During the campaign, the team will also be working with landlords to help them provide support and advice to any tenants who have got into financial difficulty with loan sharks before taking on a tenancy.
Toby Harris, chair of the National Trading Standards Board, said: “The process of moving home can be expensive and loan sharks take advantage of this, striking just when people feel under real financial pressure.
“It is crucial that people know that, even if they’re renting privately, there is help available to them if they get into financial difficulty.
“Loan sharks are illegal, predatory and should never be considered as an option.”
Officials warn that loan sharks can initially appear friendly but their behaviour can quickly change, with some resorting to threats, violence and intimidation to enforce their debts.
Councillor Chris McEwan, Darlington Borough Council’s cabinet member for economy and regeneration said: “Illegal money lenders can cause no end of misery and suffering to unsuspecting people who believe these people are there to help them.
“They loan money to make more money and do not seem to care who gets hurt in the process.
“I welcome this campaign and look forward to working with The England Illegal Money Lending Team to tackle this problem in Darlington.”
During the campaign, which begins later this month, a number of events will be held to raise awareness of loan sharks and flyers will be sent out to people living in privately rented accommodation.
Training sessions will also be held for staff who support tenants living in privately rented accommodation.
Anyone who has been a victim of a loan shark or knows of someone who had can contact the England Illegal Money Lending Team in confidence on 0300-555-2222.
Alternatively, email email@example.com or send a private message on facebook.com/stoploansharksproject
Source – Northern Echo, 17 July 2014
A crime team has been championed for its efforts to tackle loan sharks.
Durham Constabulary has been commended for its outstanding work to raise awareness of the dangers of using illegal lenders in the Stop Loan Sharks Award.
The England Illegal Money Lending Team (IMLT) nominated the officers for its commitment to educating people and promoting the organisation’s work.
It added there was also a focus on tackling the issue at a planning level, with added support to carry out warrants, and encourage confidential reporting in whatever way people feel comfortable.
The IMLT works with Durham County Council and other Trading Standards authorities across the country.
The force is now in with a chance of becoming the national winner and receiving £1,000 worth of proceeds of crime money to fund further awareness raising, after an online public vote.
Detective Inspector Lyn Peart, of Durham Constabulary, said: “We are delighted to have been recognised for the work we do.
“Our message is simple – this activity will not be tolerated and, along with our partners, we will be relentless in our campaign to stop those involved in it.
“We look forward to continuing to work alongside our partners to tackle this issue and to keep our communities safe.”
Anyone who wants to speak about loan sharks can call the 24-hour confidential hotline on 0300 555 2222, text “loan shark + your message” to 60003, email firstname.lastname@example.org or send a private message via http://www.facebook.com/stoploansharksproject.
Source – Sunderland Echo, 14 July 2014
A loan shark who preyed on vulnerable Wearsiders has been blasted by a crown court judge.
George Laws handed out cash to customers who would not be able to get credit from legitimate lenders and charged extortionate rates of repayment – sometimes up to 100 per cent.
Newcastle Crown Court heard the 50-year-old took one woman’s cashcard and pin from her to take get her £25-per-week repayment.
Laws, of Augustus Square, Sunderland, admitted unauthorised money lending on the basis he started loaning cash to pals after he received a lump sum from an insurance payout and things “snowballed”.
Mr Recorder Nicholas Lumley QC sentenced Laws to 12 months’ imprisonment, suspended for 18 months, with a six-month night-time curfew and supervision.
The judge told him: “Basically, you are a loan shark, an unlicensed money lender.
“Over a period of two years, you loaned money to some of society’s most vulnerable people – in this case, some of the poor residents of Sunderland.
“You preyed on them in the sense they were desperate and would not have been able to obtain loans from elsewhere.
“If they borrowed from you, which they did with ease, they would have to pay back at least half as much again. It was a rate of at least 50 per cent, which is an astonishing amount.”
The judge spoke of the dangers of illegal money lending and the impact it can have.
He told Laws: “There is no regulation, victims are borrowing more easily than they should and what they are able to pay is not assessed.
“The authorities have no way of regulating a time over which money needs to be repaid or set any interest rate.
“People borrow, then they become ever more vulnerable, perhaps to the advances of other loan sharks to pay what they owe.
“Their misery is compounded simply to make you more wealthy.”
The court heard as Laws’ business grew, one of his customers reported to the police that he had seized her cashcard to ensure repayments.
When officers searched his home they found documentation relating to 10 customers and loans totalling more than £21,000.
His records showed he had already been paid back more than £24,000, but was demanding a further £8,400.
Prosecutor Kevin Wardlaw told the court: “He was local, convenient and people used him. Some customers, for every £100 borrowed would have to repay double.
“Some were paying a different rate of interest, for whatever reason.”
Graeme Cook, defending, said Laws’ lending to friends had “snowballed”.
Mr Cook added: “In no way has he ever intimidated anyone as far as trying to recover his money. At worst, he recovered a bank card and pin number to enable him to withdraw, with the customer’s consent, £25 per week out of her benefit money.”
Mr Cook said he accepted the 100 per cent interest rate charged to some customers was “too much”.
Source – Sunderland Echo, 29 M1y 2014