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Government to Make War on Loan Sharks

The Government has vowed to build on the work of an agency set up in Glasgow to fight the scourge of loan sharks.

Trade and Industry Minister Alan Johnson said: “We will build on projects in Birmingham and Glasgow to hunt out loan sharks and bring them before the courts.”

Mr Johnson added that vulnerable people had to be protected as “nothing disempowers people like excessive debt.”

This does not appear to be empty rhetoric from the Government as they have been severely critical of doorstep lenders, such as Provident, recently. Government Ministers recently admitted that the vulnerable and poor in the UK are easy prey for loan sharks and doorstep lenders. Provident in particular came in for some recent criticism after launching their Vanquish credit card, which charges up to 70% interest.

Mr Johnson promised £45m would be spent in the UK to provide one to one advice for the most vulnerable and those struggling with personal debt. He added that the pilot scheme in Glasgow was making significant progress tackling the issue.

The Scottish Illegal Money Lending Unit, which was set up in September, came in for praise from the minister, despite a report that revealed that only one of its cases had reached court and only two making it as far as reports to the Procurator-Fiscal.

Since the report was published in May, Mr Johnson revealed that the latter figure had risen to six. The scheme, at least, appears to be a step in the right direction in tackling Britain’s age old problem of loan sharks.

The agency’s report also went on to claim that the scrapping of benefit books was hampering investigations. It also felt that the new system of depositing benefit money into clients’ accounts was not combating fraud and it was intended. Mr Johnson said these claims would be looked into.

Further good news for those on benefits and low incomes, came in the form of a Government pledge of £36m to support credit unions, community development finance institutions and to provide help for people who may otherwise consider approaching a loan shark. It is hoped that by providing unsecured loans at affordable rates for those who do not qualify for high street loans, that the market for loan sharks will diminish.

Government assistance is needed as for many struggling to cope with debt feel that the only legal alternative for unsecured loans is to approach lenders who charge extortionate levels of interest.

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