Proceeds of crime money used to fight loan sharks
Published by Max Salsbury for 24dash.com in Communities and also in Finance, Legal
A country-wide initiative is using proceeds of crime money to encourage people to turn away from illegal loan sharks and save for the future.
The England Illegal Money Lending Team (EIMLT), which investigates and prosecutes loan sharks, is urging people to join credit unions, in a scheme that could save £93 million.
Funded with crime money taken from convicted loan sharks, and used to benefit areas where people have been or could potentially be affected by the crime, credit unions all across the country took part in the initiative, with members who saved for at least three months receiving a cash bonus.
In the past financial year more than 1,000 people took part in the incentive, with more than 80% still saving after six months to a year. More than half of these are adding to their savings on a weekly basis. Many of the credit unions reported a huge increase in membership levels after taking part in the initiative. There were also 150 junior accounts opened.
Loan sharks target those who may not be able to access credit through mainstream sources, ripping them off with exorbitant charges and excessive interest payments. Many loan sharks will charge 'double bubble', forcing borrowers to pay back twice the amount they have borrowed.
The latest research estimates that 310,000 people across the country have borrowed from a loan shark. On the assumption that each borrowed the average of £350 and paid back double the loan, a vast £217m has been put into the pockets of illegal money lenders.
Had borrowers taken their loan from a credit union at a rate of 26.8% APR over 52 weeks with weekly payments, they would have collectively paid less than £124m - £93m less.
The EIMLT discovered one loan shark who charged the equivalent of 131,000% APR. Another forced a victim to pay back £90,000 on a £250 loan over a period of nearly two decades.
The Team has secured 263 prosecutions for illegal money lending and related criminality, leading to custodial sentences in excess of 167 years. More than 22,000 victims have been helped and over £40.3 worth of illegal debt has been cleared.
Lord Toby Harris, chair of the National Trading Standards board, said: “It is a privilege to be able to support such an established and successful project. The illegal money lending teams are delivering the right results day in and day out. They go far beyond, their aim to put loan sharks behind bars and truly impact on the lives of so many people.”
Tony Quigley, EIMLT head, said: “This scheme is another way of putting proceeds of crime money, which has been extorted by loan sharks back into our communities so it can benefit the public. We’d encourage people to steer clear of loan sharks and to look to their local credit union. They encourage a saving culture and can provide loans which are safe, legal and far more affordable than borrowing from a loan shark."