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05 May 2022

Impact of loan sharks to social housing sector in Wales

Impact of loan sharks to social housing sector in Wales

The increasing cost of living fills most people with fear - and we know from bitter experience that illegal lenders - more commonly known as loan sharks - will be looking to exploit people in their moments of crisis. Liz Emmons from Stop Loan Sharks Wales explains.

Back in 2008 we established the Wales Illegal Money Lending Unit, with the purpose of bringing illegal lenders - or loan sharks - to justice, and supporting and protecting their ‘customers’. A ‘loan shark’ is anyone who is lending money without having the authorisation required by the Financial Services and Market Act 2000. Banks, building societies, credit unions and other legal sources of lending are required to register and demonstrate their services are appropriate to keep their legal lending status.

Illegal lenders won’t have a complaints process, or allow breathing space to help people manage and repay debts and of course, the interest or amount to be repaid is not clear at the start (if ever). They come in all shapes and sizes, and operate in every community in Wales. Of course there are some that act and operate like the caricatures that grace our soaps, but most are far more sophisticated in identifying and targeting their victims - and many are female.

We hear about grooming in the context of other crimes, but it applies in this field too: lenders build trust and a false sense of loyalty in their victims before the feeding frenzy and exploitation begins.

“Any chance u can lend me 25, XX has sports day tomorrow he needs packed lunch and new socks and trainers please text me to let me know either way thanks really desperate.”

This was a text sent by a young mum. Who can't empathise with the feeling of hopelessness of not being able to afford to give their child what they need and the hope of being able to do something? But very quickly that £25 owed doubles and keeps doubling - and the victim’s sense of hope becomes despair, in the face of threats of violence against them, their families and the child they wanted to protect and provide for.

As people are faced with even tighter budgets, and impossible choices between which necessities they can afford, we are even more concerned that they will be exploited by illegal lenders.

We recently heard from a tenancy support officer in a north Wales housing association, who was working with a family that had got into rent arrears after one parent was made redundant and the other had her work hours cut. During their conversations, the tenant mentioned that she had borrowed money from ‘a friend’ to buy a washing machine when the old one broke. In response to a couple more questions, it became clear that the ‘friend’ was expecting substantial interest payments and was becoming intimidating when the tenant couldn’t meet her demands.

The ‘friend’ was a loan shark, and the tenancy support officer contacted the Wales Illegal Money Lending Unit who were able to assist and protect the tenant while starting the process that led to the loan shark being prosecuted.

We know from experience that those in the social housing sector who work closely with tenants care about their welfare - and so we have a request to make. To help us to stop the cost of living crisis becoming a catastrophe, we are asking housing association staff to please contact us if you have concerns that there is a loan shark exploiting people in your area. We are happy to discuss any concerns with you, and work with you and your tenants. The victim’s or borrower’s safety and security is at the forefront of the way we work, and reporting can be anonymous.

Our traffic light poster and toolkit with more information on what signs to look out for are available on request. We can also provide free awareness training to your teams, or spend some time viewing our recent spotlight on loan shark awareness. Click here for more.

Hotline: 0300 123 33 11