Shark hunting - netting the illegal money lenders

Many tenants of social landlords who find themselves falling victim to spiralling debt turn to money lenders and loan sharks to make ends meet, but instead find themselves in even greater financial difficulties. Paul Humphries reports on one ALMO’s fight to stop money lenders in their tracks.

Gina can't bear to have the money lenders knocking on her door. She leaves the monthly payments to be collected from her mother-in-law's. She doesn't even know how much she owes them. Just keeps making the payments.

It was both her husband Jim's family and her own that suggested the couple turned to the money lenders when Gina and Jim found themselves hopelessly in debt. These two families, like others on council estates across the country, had used them before and saw nothing wrong in paying high interest rates if it meant ready cash and few questions asked. What she and her husband needed was help with managing their money, not an introduction to the backstreet bankers.

That help has now arrived in the shape of Alison Whitehead and Janice Bell from Sheffield Homes, two quite remarkable people who are helping change lives across the city's estates. They are part of the ALMO's money advice service, which has been operating over the past year giving advice to tenants struggling to pay their rent or finding themselves in multiple debt.

Like many of their clients, they picked up on Gina, 24, when she and Jim, 30, and their three-year-old daughter were facing eviction for repeated non-payment of rent. "They were living on nothing," says Janice, "and it had reached crisis point. They were robbing Peter to pay Paul and that way never works. Alison and myself are working with them and we're gradually getting there."

Getting there means learning to manage the family budget, prioritising payments and not getting further into debt. Just the simple act of opening the day's mail and facing demand letters is a big step forward for someone saddled with debt.

Alison and Janice have dealt with over 70 cases, from debt involving a few hundred pounds to one case where a customer owed £15,000. This man had got out of the habit of paying important bills and, like Gina and Jim, was paying doorstep lenders instead. "It was a case of whoever knocked on the door first on a Friday night got paid," says Janice.

Debt is a massive problem for some social housing tenants. When Sheffield Homes was looking to set up its money advice team, it unearthered some astonishing national statistics: 60% of those who are financially excluded are social rent tenants, 16% of social rent tenants have no bank accounts, 81% of social rent tenants have no savings and 91% of social rent tenants have no insurance cover.

Officially, three million people across the country borrow from the 'home credit industry' at 164%+ APR and 70% of these are social renters. The 'home credit industry' consists of legal money lenders, but there are also loan sharks, a big problem in our towns and cities, who charge extortionate interest payments. There are no figures to show how many people are caught up in the loan sharks' net.

"We've come across legal and illegal money lenders in Sheffield," says Alison, "and not all the loan sharks are operating on the estates. We've learned of four lenders operating in some very well-heeled parts of the city."

The money advice team was instrumental in bringing Sheffield's first prosecution against a loan shark. One of their clients went to court and gave evidence against him. Janice went with the tenant to give support and Sheffield Homes re-housed him for his own safety. The loan shark went to jail.

That tenant only came forward because of the trust he had in Alison and Janice. The two make it quite plain they will always have an open mind and never be judgemental. The skills learned from past experience in dealing with rent arrears, benefits advice and handling anti-social behaviour help this two-woman team bring down barriers.

The Sheffield team has found that in many cases tenants don't know they can access help and advice to sort out their financial problems and the help has varied with every case, from a simple telephone call to set up an appointment to see a debt advisor, to an extended plan of action when cases are more complex.

Over the past year, since its launch at the end of 2007, the money advice service has picked up on ten tenants who faced eviction but who got a second chance when Alison and Janice moved in to help. Maxine Stavrianakos, head of income management at Sheffield Homes, says: "It's a win-win situation for us. There have been enormous benefits. There is a tremendous social cost to eviction."

When Maxine looked at restructuring the rent section, the idea of bringing in a firm from outside was floated but she wanted it in-house. "We wanted to stop arrears occuring in the first place. We wanted prevention rather than having to act once the tenants fell into arrears. I felt we had among us the personal skills to identify problems, do the initial work and anyone with serious problems could be referred to others, such as the debt support unit. This is very much partnership working."

And across the country the social housing sector is working with partners to help people suffering financial hardship.
One of Sheffield Homes' important allies in this has been the city's credit union. Credit unions lend money on an affordable basis, are properly regulated and people on low incomes, who are financially excluded from normal high street lending, can access loans and savings accounts. Now, thanks to a group of housing associations, people suffering financial exclusion in one part of Hampshire are being thrown this lifeline.

Sentinel HA, with support from Kingfisher, Sovereign, Swaythling, and Downland housing associations, will in the New Year launch a Basingstoke branch of Hampshire Savers Credit Union. As well as providing people with alternative credit to that being offered by doorstep lenders in the area, Sentinel is also encouraging staff to open savings accounts.

It has part-funded a Citizens' Advice case worker to provide debt and benefit advice alongside Sentinel's in-house adviser. A DVD for residents on how to cope with the credit crunch, looking beyond arrears at areas like budgeting, increasing income and cutting debts is being produced. This will be out early next year and Sentinel is offering to brand this for other housing associations to distribute to their residents. (Contact Steve Murphy on 01252 788716).

Salix Homes, Salford's ALMO, is another housing organisation actively working with credit unions and debt counsellors, in this case with River Valley credit union and Greater Manchester Moneyline to provide an information pack on opening a bank account, saving and borrowing and claiming benefits. It also provides people with information that will signpost them to a range of financial services.

Sue Sutton, Head of Neighbourhood Services at Salix Homes said: "With the recent economic problems, more than ever people are now having to watch how they spend and look after their money."
Now, thanks to Sheffield Homes, Gina and Jim (not their real names) are doing just that: learning how to look after their money and what their priorities have to be. Alison and Janice have calculated the couple's total debt is £4,600 and are working with them to gradually reduce it.

"It has made a massive difference to us," says Gina, "We don't know what we would have done without them."