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09/07

25 January 2007

Government announces roll out of projects tackling loan sharks

Today, the Chancellor of the Exchequer, Gordon Brown, announced new funding to enable the national roll out of a scheme to tackle loan sharks, with a base in every region. Schemes tackling loan sharks have already been successfully piloted in the West Midlands and Scotland and work by improving support for people targeted by loan sharks and exposing and prosecuting the people illegally charging exorbitant rates of interest.

These new projects are an important part of the Government's strategy of increasing the availability of affordable and appropriate sources of credit for the financially excluded.

Commenting on the roll out of the project, the Minister responsible for financial inclusion, Ed Balls, said:

"Loan sharks are a blight on some of the least well off communities, and so I am pleased to see the success we are already having in tackling these criminals and helping their victims. Today's announcement will bring help to more victims nationwide while also sending a further warning that these illegal and unacceptable practices will not be tolerated."

Minister for Trade, Ian McCartney, said:

"Loan sharks are parasites in our poorest communities. They use violence and intimidation against some of the most vulnerable people. The pilots in Glasgow and Birmingham have already put some of the worst bullies in Britain behind bars. Today we send a clear message to loans sharks everywhere in Britain. There is no hiding place. Wherever you are, we will seek you out, prosecute you and make you pay."

Over the last two years, two pilot specialist teams based in Birmingham and Glasgow have been working to tackle criminals who illegally give out quick cash loans, often using intimidation and threats of violence to extort large sums of money in return. These teams work by overcoming the barriers to successful law enforcement that often arise from the fear and intimidation of victims, and by providing support to victims in finding legal alternatives. The teams have been responsible for a number of high profile prosecutions of loan-sharks in the West Midlands and Scotland. The Government announced in December that funding would be made available for these pilots to be extended to new locations, including Sheffield, Leeds/Bradford, and Liverpool. Today's announcement sees the roll out of the projects around the country, focussing on areas where the problem of illegal lending is prevalent.

Notes to editors

  1. Research published by the Department of Trade and Industry (DTI) in December finds that the specialist teams have had considerable success in tackling illegal lending. The research also shows that the UK, with its efficient and diverse financial services market, has a low incidence of illegal lending compared to other European countries. Nevertheless, approximately 165,000 households in the UK use illegal money lenders. As many as half of these are in the poorest parts of the country, often concentrated in the most deprived urban housing estates, where legal alternatives are hardest to access. The new projects announced today will focus on these areas.
  2. Two pilot teams were established by the DTI, working with local Trading Standards offices in Birmingham and Glasgow, in September 2004.
  3. Funding announced by the Government in December allowed for the continuation of these projects and their extension into Sheffield, West Yorkshire and Liverpool in 2007-08. Today's announcement sees the roll-out of the projects to every region of the country in 2007-08. the location of the new regional bases will be set out by the DTI in due course.
  4. The Birmingham team has secured a number of prosecutions, cautions and injunctions, helping over a thousand victims and wiping out over £1 million worth of debt.
  5. The research into illegal lending can be found on the DTI website.
  6. A strategic cross-government approach to consumer debt was set out in 'Tackling Over-indebtedness: Action Plan 2004'. Progress against the report was set out in "Tackling Over-indebtedness: Annual Report 2006" published in September. The strategy is working to minimise the number of people who become over-indebted and improve the support and processes for those who have fallen into debt.
  7. The Government's strategy for financial inclusion focuses on the three priority areas of access to banking, access to affordable credit, and access to free face-to-face money advice.
  8. As part of this strategy, the Government has allocated £36 million in third sector lenders such as credit unions and Community Development Finance Institutions, to increase the supply of affordable and appropriate credit for the financially excluded.
  9. The Government has also allocated £4 million to a DTI project recruiting and training around 450 new money advisers to increase the availability of money and debt advice for those who need it most.
  10. Media enquiries should be addressed to the Treasury Press Office on 020 7270 5238.
  11. Non-media enquiries should be addressed to the Treasury Correspondence and Enquiry Unit on 020 7270 4558, or by e-mail
  12. This press release and other Treasury publications and information are available on the Treasury website. If you would like Treasury press releases to be sent to you automatically by e-mail you can subscribe to this service from the press release site on the website.

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