Debt support organisations in Salford including Citizens’ Advice have warned of the dangers of borrowing from illegal lenders during Stop Loan Sharks Week.
Stop Loan Sharks began its awareness week on December 5. The week runs until Wednesday 12 and aims to tackle the problem of illegal lenders, known as ‘loan sharks’.
This practice is a particular concern in areas with above-average poverty levels, such as Salford.
Tom Togher, Chief Officer of Salford Citizens’ Advice, said: “It’s all in the name about illegal money lenders.
“What that actually means is, if people actually get into trouble and get behind on that loan, they’re likely to face violence and criminality in terms of the recovery processes. It’s a dangerous thing to do.
“The other thing that’s really important to think about is that it’s unregulated. There are no controls over the rates of interest that are charged or how the interest is calculated.
“People will be paying far more back than they would be if they were trying to get conventional credit.”
Illegal lending via loan sharks is a nationwide problem, affecting an estimated 300,000 people in the UK.
Beware of loan sharks this #Christmas! ?⚠️ A small loan can quickly escalate into something much more serious. Only borrow from safe and responsible lenders like a credit union ? https://t.co/Q8Q07cwl5u #SLSWeek18 pic.twitter.com/B6ULzPFWrC
— Stop Loan Sharks (@LoanSharkNews) December 6, 2018
Lenders target financially vulnerable people, such as those already in debt.
With Salford ranked the 22nd most deprived local authority in England, there is concern that the effects of illegal lending will be felt here.
Mr Togher warns that it can be “hard to recognise” illegal lending initially, adding: “It often works in informal environments.
“Outside the school gates for instance, another parent saying ‘have you thought about this person who lives on our street’. It can sometimes feel like a friendly, community process.
“But it’s not. It’s still illegal money lending.”
How to avoid the bite of loan sharks
Alongside its anti-poverty strategy, Salford City Council’s debt advice service offers tips on how to avoid loan sharks.
The council recommends borrowing with Salford Credit Union to avoid falling into the trap of illegal loans, which it says can easily “spiral out of control”.
During Stop Loan Sharks Week, anybody who contacts their local Citizens’ Advice branch about illegal lending will receive a next-day referral.
Other organisations offering free debt advice to Salford residents include Salford Unemployed & Community Resource Centre (UCRC).
Stop Loan Sharks is an initiative by the Illegal Money Lending Team (IMLT), the government body responsible for getting loan sharks prosecuted. They operate a number of campaigns all year round, focused on key issues. They also raise awareness in the process of finding and bringing to justice illegal lenders across the UK.