As the UK mulls over the comments made by Archbishop Welby – that payday lenders should be forced out of business, this blog examines the rise of loan sharks in the UK, and what is being done about it.
The UK economy is making a slow recovery which is being celebrated at the highest echelons of government, however at the opposite end of this spectrum – in the households of poor families up and down the country, the economy's recovery and all the public spending cuts that have gone with it, has created a new underclass of people whose only answer to rising fuel poverty, and rising food poverty is to turn to local loan sharks. Often turning to a loan shark is the only answer for someone who has been turned down by payday lenders like Wonga, who are now required to conduct strict checks on their applicants.
The scourge of loan shark activity can be illustrated by the real-life case of a UK victim of a loan shark who borrowed 300 pounds, only to realise that in 12 weeks the money to be repaid had mounted up to thousands of pounds. This victim of illegal money lending decided to take his own life and while this incident was an isolated incident in terms of what was reported, we can only imagine the number of unreported incidences of loan shark activity leading to tragic consequences for its victims. Loan shark activity is something that relies on fear and silence to perpetuate it. People fear retribution by the loan sharks and pay the money to keep their homes safe from intimidation tactics and violence.
Research indicates that loan shark activity is on the rise in the UK and despite targeted campaigns in loan shark hotspots like Wigan in the UK, where advertising and awareness campaigns have highlighted the dangers of loan sharks, the increased activity of loan sharks continues to be a worrying trend which is not being effectively addressed.
A loan shark is an illegal lender who lends money and seeks to retrieve the money using illegal tactics like violence and intimidation. Typically the loans are available immediately, however they are lent on seriously bad terms such as extremely high interest rates and high monetary penalties for non-payment. Money – lending is a regulated activity within the UK, which means that the process of lending money is something that can only be done with a license.
This is a complex problem and there are no doubt many reasons why loan shark activity is on the rise. A recovering UK economy has been created at the expense of the kind of people who fall victim to loan sharks – seriously poor people who live on benefits and experience the problems of fuel poverty and food poverty. Often, there are no effective short – term measures in place at local level to alleviate the distress of people experiencing food poverty or fuel poverty. These people sometimes use the services of payday lenders who can provide money, upfront which can be used immediately. The short – term loan is designed to be paid back within a few weeks, for a small fee. Given the relief that payday lenders bring to the people who use them, and the protection they offer from the clasp of loan sharks, it is surprising that they have been criticised so widely by high profile people including Archbishop Welby who argued that payday lenders should be forced out of business. It is little wonder that Archbishop Welby recently came out to acknowledge the benefits that payday lenders can bring to poor people.
There has been a limited response, within the UK to the rise in illegal money-lending. An example is the Wigan area, which experts believe is a hotspot for illegal money-lending, where trading standards, operating in conjunction with other professionals have mounted a publicity campaign to show people what to do, if caught in an illegal money-lending arrangement. Pop-up displays have been erected in the Wigan towncentre and professionals have been on hand to explain what loan sharks are, what to do if you are being intimidated by a loan shark and how to cope with debt. The campaign will also focus on giving people in private rented accommodation information about loan sharks, as private rented homes are increasingly being targeted by illegal money lenders.
Are you intrigued by the debate highlighted here? Post your views!
An economic recovery for all?
The UK economy is making a slow recovery which is being celebrated at the highest echelons of government, however at the opposite end of this spectrum – in the households of poor families up and down the country, the economy's recovery and all the public spending cuts that have gone with it, has created a new underclass of people whose only answer to rising fuel poverty, and rising food poverty is to turn to local loan sharks. Often turning to a loan shark is the only answer for someone who has been turned down by payday lenders like Wonga, who are now required to conduct strict checks on their applicants.
Loan shark victims on the rise
The scourge of loan shark activity can be illustrated by the real-life case of a UK victim of a loan shark who borrowed 300 pounds, only to realise that in 12 weeks the money to be repaid had mounted up to thousands of pounds. This victim of illegal money lending decided to take his own life and while this incident was an isolated incident in terms of what was reported, we can only imagine the number of unreported incidences of loan shark activity leading to tragic consequences for its victims. Loan shark activity is something that relies on fear and silence to perpetuate it. People fear retribution by the loan sharks and pay the money to keep their homes safe from intimidation tactics and violence.
Research indicates that loan shark activity is on the rise in the UK and despite targeted campaigns in loan shark hotspots like Wigan in the UK, where advertising and awareness campaigns have highlighted the dangers of loan sharks, the increased activity of loan sharks continues to be a worrying trend which is not being effectively addressed.
What is a loan shark?
A loan shark is an illegal lender who lends money and seeks to retrieve the money using illegal tactics like violence and intimidation. Typically the loans are available immediately, however they are lent on seriously bad terms such as extremely high interest rates and high monetary penalties for non-payment. Money – lending is a regulated activity within the UK, which means that the process of lending money is something that can only be done with a license.
Why is loan shark activity on the rise?
This is a complex problem and there are no doubt many reasons why loan shark activity is on the rise. A recovering UK economy has been created at the expense of the kind of people who fall victim to loan sharks – seriously poor people who live on benefits and experience the problems of fuel poverty and food poverty. Often, there are no effective short – term measures in place at local level to alleviate the distress of people experiencing food poverty or fuel poverty. These people sometimes use the services of payday lenders who can provide money, upfront which can be used immediately. The short – term loan is designed to be paid back within a few weeks, for a small fee. Given the relief that payday lenders bring to the people who use them, and the protection they offer from the clasp of loan sharks, it is surprising that they have been criticised so widely by high profile people including Archbishop Welby who argued that payday lenders should be forced out of business. It is little wonder that Archbishop Welby recently came out to acknowledge the benefits that payday lenders can bring to poor people.
What is being done about the rise in loan shark activity?
There has been a limited response, within the UK to the rise in illegal money-lending. An example is the Wigan area, which experts believe is a hotspot for illegal money-lending, where trading standards, operating in conjunction with other professionals have mounted a publicity campaign to show people what to do, if caught in an illegal money-lending arrangement. Pop-up displays have been erected in the Wigan towncentre and professionals have been on hand to explain what loan sharks are, what to do if you are being intimidated by a loan shark and how to cope with debt. The campaign will also focus on giving people in private rented accommodation information about loan sharks, as private rented homes are increasingly being targeted by illegal money lenders.
Are you intrigued by the debate highlighted here? Post your views!
|
Some of our content may be related to gambling.    |