British government announces new national scheme to combat loan sharks

Following a two year successful pilot scheme conducted in Birmingham and Glasgow to tackle criminals who illegally give out quick cash loans, the Chancellor of the Exchequer, Gordon Brown, has announced that the British government is going to nationalise the scheme and to make available new funding to try and combat the problems created by loan sharks.

"Loan sharks", people or groups who illegal provide loans to members of the public who cannot otherwise obtain funding from elsewhere in return for extortionate rates of interest, have long been seen as a problem in British society – as well as being the subject of books, films and TV shows. In many cases, repayment of these debts is virtually impossible because of the high rate of interest being charged on the loan and so repayment is "encouraged" by threats of violence or actual violence.

Surprisingly, given the times we live in, figures kept by the Department of Trade and Industry indicate that as many as 165,000 household in Britain will have borrowed money from a loan shark at some point. Ed Balls, Economic Secretary to the Treasury, commented that loan sharks "are a blight" to British communities, especially those in less affluent areas.

The aim of the new national scheme will be to make available improved financial advice to those who may be affected by loan sharks by offering them the chance to compare the many different types of loans currently available in the UK so that they can select the one that is most appropriate to their then existing financial needs. The scheme also aims to tackle the problem of loan sharks head-on by exposing and prosecuting loan sharks who illegally charge exorbitant rates of interest on the loans they give. In addition to these noble aims, the scheme will also promote financial inclusion for disadvantaged sections of British society. To this end, following consultations with banks and cash machine providers, the latest announced strategy of the government is a plan to make available 600 free-to-use cash machines in low-income areas.

Commenting on Gordon Brown's announcement, Ed Balls said: "[This] announcement will bring help to more victims nationwide while also sending a further warning that these illegal and unacceptable practices will not be tolerated". Claire Whyley, Deputy Director of Policy at the National Consumer Council, added that: "It’s vital these new projects are supported by efforts to make more affordable credit widely accessible in poor communities".

Alisdair Milton
1st January 2007