Category Archives: News

Smart Summer Holiday Tips for Parents

Summer is here with us! It’s that time when you need to take a break and soak in the sun, sand, and sea. Whatever your plans are, you need to make some considerations to avoid common mistakes. Summer holidays can be challenging especially when you have kids. Luckily, we have some smart summer tips for parents like you to consider.

No countdowns

We are fond of counting down the days to a holiday. Although many think this is a good practice to get everyone excited about the holiday, countdowns aren’t recommended for kids because they send a distorted message, i.e., they teach kids to focus on future happiness as opposed to current happiness. This shouldn’t be the case. It’s OK to build anticipation about an oncoming holiday; however, talking about what you will do, what it will be like is a better approach to appreciating the present and future moments.

Expensive summer holidays aren’t necessary

You don’t need a costly summer vacation with your family to enjoy the season. In fact, kids don’t really care if you are in the Bahamas or your backyard provided you are spending quality time with them. Happiness is closely related to relationships than money so focus on the memories you will make together during summer as opposed to the money you should spend. It is possible to have a memorable summer with your kids at home this year if funds don’t allow you to travel abroad. You can even travel locally and still have a lot of fun and priceless memories.

Plan meticulously

You’ll need to plan better when you are planning a summer holiday with your kids. Besides making basic travel plans, you need to plan further highlighting the activities you would like to engage in as a family. Creating such plans ensures there is no dull moment. You need to take a pen and paper and brainstorm with your kids about the fun summer activities they would like to engage in. When doing this, incorporate everything together, i.e., play dates and crafts without losing sight of what’s important.

Creating a to-do-list is important, but it can make your kids focus on the activity as opposed to who they will be doing it with. Making such a consideration will help your kids focus on what is really important. Kids prefer parents who can engage them in activities, so you should choose a slightly cluttered environment over a spotless one since it leaves room for you and your kids to engage in enriching activities together.

Don’t agree with all your kids’ requests

Kids can tell when you are in the spirit to attend to all their requests so don’t lose your guard completely. Spoiling your kids is good once in a while but accepting requests made for a lark isn’t a good idea. Remember, kids expect more when you give more so the requests will keep piling up if you don’t get your power back. Furthermore, feeling the pressure to meet all your kids’ demands is among the top reasons why family summer vacations end up being expensive. If you don’t want to survive on payday loans and credit card loans once you are back, make a conscious decision on the levels you are going to go for your kids.

Don’t laze around too much

Although summer is mostly about lazing around all day and soaking in the sun doing nothing for most people, kids need some adventure and physical activity on a daily basis. So, be intentional about adventures and engaging activities to keep your kids centered.

Relax and let go

As mentioned above, you need to plan meticulously, however, don’t be the uptight parent that gets annoyed about little things while on holiday. You are bound to meet many people during your holiday, and some may be annoying. It can also be overwhelming watching your kids in unfamiliar territory but relax and purpose to enjoy your time together as a family.

You don’t have to cringe when you think of traveling with your kids during summer. The holiday doesn’t have to be an expensive affair either that leaves you surviving with payday loans among other types of short term loans when it’s all over. If you take the time to plan everything without losing sight of what really matters, your family will enjoy summer 2018 more than any other summer holiday. As long as you are together as a family immersed in fun activities, summer is bound to be fun without “breaking the bank”.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Bank of England’s Ramsden Hints Interest Rate Hike In August

According to the Bank of England (BOE) deputy governor, the UK economy stands to emerge from economic slowdown as wage pressures increase.

The chances of a rate hike in August are high after a cautious policy setter at the BOE signalled support for increased borrowing costs. According to Sir Dave Ramsden, the UK economy appears to be getting out of an early soft patch at a time when income pressures are mounting. Ramsden who is just one of the two Bank of England monetary policy members to vote against a rate hike last November said that tighter policy is imminent otherwise inflation will surpass the government’s target of 2%.

During the November 2017 monetary policy meeting, Ramsden voted against a 0.25 point increase. He was just one of two members who voted against the increase. With his current sentiments, a rate hike is imminent in August.

Ramsden hinted on a rate hike during a recent speech in London. He stated that the slow growth in income is the main reason he had been taking a wait-and-see approach towards an interest rate hike in November adding that wage growth had been increasing steadily for the past two quarters. In his sentiments, Ramsden stated that the period of unusually slow growth in wages is most likely behind us.

Bank of England decided against an interest rate hike in May despite there being strong indications of a hike. In the weeks before the BOE’s MPC meeting, there was a run of disappointing economic data warranting a hike.

According to Ramsden, the evidence mounting since the last MPC meeting confirms the committee’s view of the economic slowdown being temporary. Although we are still in the second quarter which means it is still early in the data cycle and the last MPC meeting was a month ago, Ramsden feels the data that has been collected suggests the MPC’s interpretation of a temporary economic slowdown between January and March to be true.

The current data shows that consumer credit and consumer confidence has picked. The same applies to retail sales and a number of business surveys including the latest purchasing manager’s index or PMI output balance which represents 80% of the UK economy.

The PMI is calculated after a monthly survey is sent and filled by senior executives the largest companies in the UK. The survey targets data on new orders, production, inventory levels, employment and supplier deliveries. The PMI offers valuable information on the current business conditions according to company decision makers, purchasing managers and analysts. A high PMI is good for business and the overall economy. According to Ramsden, the May PMI was in line with expectations.

Looking forward, his expectations for the UK economy are also within the expectation of the Monetary Policy Committee’s best collective judgment expressed

in the latest inflation report forecasts. The UK’s global growth is intact although it looks less rosy than before. Ramsden expresses similar sentiments on the labour market by describing it as robust.

He expects the GDP growth to become steady although the pace and demand for goods and services continue to move from consumption to trade and investment.

Ramsden doesn’t see any problem with the current pace of growth since it would still be adequate to surpass the Bank of England’s new “lower speed limit” which was revised downwards because of the poor state of productivity performance of the UK’s economy ten years after the financial crisis. Unemployment is set to decrease to 4 percent, and a tiny margin of demand will open up.

In his speech, Ramsden added that without a 0.75 point rate rise expected over the next 3 years by the global financial markets, inflation is expected to remain around 2.4% which would be materially above the target which doesn’t seem like a desirable outcome. An inflation rate that is continuously above target coupled with prolonged periods of excess demand translates to the MPC’s failure to meet the remit.

Effects

Interest rate hikes tend to increase the cost of credit as lenders start charging borrowers more for loans. You should expect to pay slightly more interest on your payday loans, overdrafts, personal loans, mortgages among other types of loans if the BOE hikes the rate in August. A rate hike will, however, keep inflation levels in check as well as increase the value of the pound against major currencies.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

DWP Survey Shows Approx. 50% of UC Claimants Struggling to Pay Bills

According to a DWP (Department for Work & Pensions) survey done recently, approximately 50% of Universal Credit (UC) claimants are struggling to pay household bills. This finding can be found in a detailed report that has sparked outrage. [1] Many charities are demanding reform following the shocking findings on UC which combines six benefits (Housing Benefit, Income Based Jobseeker’s Allowance, Child Tax Credit, Working TaxCredit, Income Support and Income-based Employment & Support Allowance) into a single monthly payment. Universal Credit was established in 2013 as a social security benefit replacing six benefits and tax credits.

Over 800,000 new claimants are on UC. Existing claimants will commence movement to UC in 2019. Tory ministers have been on record stating that UC is fairer and ensures work pays yet the survey shows that 44% of claimants fall behind with their bills, keep up but face constant struggles or experience serious financial difficulties 3 months into their claim.

The figure isn’t any better eight to nine months into a UC claim considering it reduces to 40%, a mere 4% reduction.

A further 28-32% of claimants stated that they face challenges with household bills occasionally leaving just 25% as the number of claimants with no difficulties.

In one group, 33% of claimants confessed to borrowing money from family and friends while 11% relied on short-term loans like overdrafts. Others admitted to using charities, payday loan companies as well as doorstep lenders to survive.

A record 44% of claimants (in the first wave survey) admitted to struggling to pay utility bills. Meanwhile, 35 to 36% have housing cost arrears, and for 44% of those people who had arrears, the arrears increased significantly by the time they were 8 or 9 months into their UC claim.

According to the C.E.O. of Child Poverty Action Group, Alison Garnham, these figures are a testament that Universal Credit has failed.

However, Work and Pensions Secretary Esther McVey is of a slightly different opinion. She insists UC will make work pay. According to Mc Vey, it is evident that many people who are months into a claim are left with little to live on but Universal Credit had a strong poverty reduction potential which has been affected by big funding reductions compromising its ability to achieve original aims. Mc Vey admits there are faults in the UC design that have been left uncorrected and goes further to state that the benefit will continue to fail if the funding isn’t restored and the original design re-visited.

IFF Research conducted the DWP (Department for Work & Pensions) survey which involved 4202 people from March-September 2017.

The survey interviewed 2194 people in the 1st wave, 42% of whom offered to be questioned in the 2nd wave alongside 1422 other claimants chosen for the 2nd wave.

The survey findings also indicated that approximately 43% of the claimants were in need of support or help with their UC claim, i.e., how to register online. The findings also indicated a need to improve the scope of knowledge of Universal Credit. Authors admitted to lacking knowledge on some matters since only 51% understood that every hour worked will leave them in a better position.

Authors admitted there is “scope to improve knowledge of UC” after only 51% knew every hour they work would leave them better off.

The survey also showed some positive employment outcome with statistics such as an increase in the percentage of paid work rose from 23 to 40% at the beginning of a UC claim to eight months in.

According to the DWP, the survey indicates that most claimants have no problem managing their money with approximately 67% saying they are confident with their UC payments.

The survey which was done between March and September last year was done before any changes were made to the autumn budget.

Some changes have been made including the abolition of waiting days which has made all advance payments available immediately from day one. There has also been an introduction of a two-week additional housing cost support meant for people joining UC from Housing Benefit. The findings in the DWP report were used as a basis for introducing these changes.

The DWP is also planning to increase funding on budgeting advice as well as digital support up to £200 million making these services available to people who need them.

However, as long as claimants continue to depend on payday loans among other types of short term loans, UC has a long way to go.

References https://bit.ly/2JyLYF5

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Ireland Cost of Living 14% Higher Than UK According to Recent Study

A new study has revealed that Irish people pay 14% more than UK residents for rent and clothes causing consumers to suffer more. Irish consumers are paying more for groceries, rent, fashion and cars among many other household goods and services according to a Provident Personal Credit study.

This is despite the small difference in wages between Irish people and their neighbours. The average wage in Ireland is £1,920.51 which is £107 more than in the UK. This slightly higher wage isn’t enough to cater for a higher cost of goods and services.

Key concerns: Rent, Fashion, Cars, and Fuel

Rent is a massive problem in Ireland given Irish people pay 51 to 53 percent more than their counterparts in the UK. The ever-rising cost of rent has caused many Irish residents into homeless shelters as the Irish government comes under immense pressure to provide a solution to the problem.

Although London is considered one of the most expensive places to live in the UK, Ireland is more expensive, and the costs extend to clothing as well. Fashion lovers in Ireland also have to pay more for clothes than their UK counterparts.

A pair of jeans costs £64.80 which is £8.40 more than the cost of a similar pair in the UK. Shoes aren’t cheap either with a pair of mid-range Nike running shoes costing £68.52 which is £8.56 more than the cost of the same type of shoes in the United Kingdom.

Even cars are more expensive in Ireland. A Volkswagen Golf (e.41) costs £18,000 in the UK while Irish residents have to pay £21,000 for the same car. What’s more interesting is; the cost of maintaining cars is the same whether you live in the UK or Ireland. Fuel is more expensive although the difference is small. The average cost of petrol in Ireland is £1.18 per litre which is about the same in the UK.

Consumer Association of Ireland (CAI) sentiments

According to the C.E.O of the CAI, Dermot Jewell, the price differences between essential goods is depressing. Jewell states it is difficult to comprehend why Ireland is still paying way above the odds compared to its nearest neighbour. He states that there are other players in the market yet the Irish people keep paying more for essentials. Jewell blames overseas players for their refusal to break down and offer price structure analysis and the reasons justifying charging Ireland residents so much more.

Coping with a high cost of living

When essentials become expensive, it is easy to plunge into debt. Many people in Ireland are already dependent on payday loans among other types of short- term loans for survival. Here are useful tips to help you reduce over-dependence on payday loans, overdraft loans, credit card loans, etc.

• Buy in bulk: You can enjoy huge discounts if you buy household goods in bulk. Although you need a considerable amount of money to do this in the beginning, it is possible to shield yourself from high prices when you buy things like clothes and household goods in bulk. This tip can also work for fuel.

• Compare prices: You’ll also need to do a bit more research before buying anything. Although the cost of living in Ireland is high, it is still possible to find stores which have better prices than others. It might be a bit more work on your side, however, this tip can save you thousands of pounds yearly. Furthermore, it is easier to compare prices today considering most companies have an online presence and almost everything can be bought online. You just need to go online and compare the prices of clothes in the most popular clothing stores in Ireland to get a good discount.

• Consider savings over loans: It is always cheaper and more convenient to use your savings instead of taking a payday loan or other short term loans. If you haven’t set up a savings account, do so immediately. Over-reliance on debt can make life unbearable especially when you are living in a place like Ireland with a skyrocketing cost of living.

• Consider home ownership over renting: When the cost of renting a home is too high, it is advisable to think of becoming a homeowner. There are many home- ownership programs in Ireland including rent-to-own that make the cost of rent more bearable since your payments go into owning the home.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Fresh Calls for Tighter Lender Regulation as Credit Costs Rise

UK borrowers are paying way more than expected for personal loans as the difference between the actual and advertised rates rises. Leading lenders in the UK are currently advertising fixed rates on typical loans at 2.8 to 4.9%, but in reality, borrowers are paying an average APR of 7.3%. This translates to approximately £204 million more every year according to the Centre for Economic & Business Research (CEBR) which discovered that these representative rates have been unrepresentative for years (since 2011).

Critics of this practice have boosted their calls for tighter legislation over marketing using these misleading rates after a survey discovered over 80% of applicants trust the advertised rate. According to current rules, at least 51% of borrowers must be offered a rate for it to be advertised. Considering personal borrowing amounts to more than £209 billion (compared to £196 billion same time last year), UK borrowers are feeling increasingly dissatisfied, mislead and confused according to industry commentators.

Shawbrook Bank, which co-authored the report, warns that this lack of transparency makes it impossible for borrowers to make informed decisions on affordability from the onset of the loan application process. Lack of transparency has in fact contributed to many people taking larger loans than they would otherwise take if they knew the actual rate initially.

In fact, this tendency can be linked to increased cases of defaults according to the CEBR research. Since the first quarter of 2016, lenders have recorded a rise in default rates for unsecured consumer loans in a record 8 out of the last 9 quarters. This clearly shows the importance of giving borrowers accurate information before they apply for loans. The research has come out immediately after the regulator reviewed the UK’s high-cost credit market last week.

There are millions of Britons depending on doorstep lenders, overdrafts, payday loans, catalogues, hire-purchase as well as rent-to-own agreements among many other forms of short-term loans in the UK. The FCA is expected to take tough action on lenders found culpable of misleading borrowers and charging high interest rates on a variety of financial products including overdrafts used by approximately 19 million Britons.

The proposals which include capping the total cost of hire purchase products and banning overdraft fees will be subject to consultation for some time. If implemented, the proposals could save UK consumers approximately £200 million every year.

According to Rachel Springall, a finance specialist at moneyfacts.co.uk, the FCA’s proposals to deal with lenders overcharging customers for loan products like overdrafts is welcome since the move would see borrowers enjoy savings amounting to £140 million per year.

Springall acknowledges that many banks have adjusted overdraft structures over the years by abolishing interest charges and introducing flat fees. Although the move has made it easier for customers to calculate charges, flat fees have turned out to be more expensive than interest on an overdrawn balance. The average usage fee for arranged overdrafts has increased to £6.75 (from £4.69) five years ago.

For instance, customers who had overdrawn £300 for two weeks on a Santander Everyday current account would have to pay £14 as charges (£1 every day). However, the same customer with a first direct 1st account would pay £0.33 only in fees based on a 15.9% EAR.

According to Springall, the complex process of comparing deals tends to put some customers off making it hard to make overdraft fees fairer. So, customers who feel they are getting bad deals should shop around for the best short-term loan deals without forgetting about their long-term borrowing needs.

However, some critics argue that the FCA needs to do much more considering StepChange Debt Charity statistics show a record 1.4 million British households used high-cost credit to pay for essential goods last year.

According to the head of Which? Money, Gareth Shaw, unarranged overdraft charges tend to spiral up to seven times more in charges compared to payday loans making it wrong for the regulator to continue delaying action.

Shaw continues to stress on the fact that the FCA expressed concerns on the way overdrafts work last summer but is yet to take action one year later. Shaw states that the government must intervene to make sure unarranged overdraft fees are matched with fees charged on arranged overdrafts. This should take place since many people are suffering because of these rip-off fees yet the FCA continues to delay action.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Sham UK Payday Loan Companies Con Vulnerable Borrowers £3.5 m Yearly

UK watchdogs have launched an investigation involving over 200 lenders in an effort to nab a large network of fraudsters that has been targeting vulnerable borrowers in the UK.

One such borrower, Peter Elliot aged 75 was conned £200 as he tried to hunt for a £1000 loan to go for a Christmas trip.

According to a Sunday People investigation, bogus payday loan companies in the UK are targeting the elderly and vulnerable conning them approximately £3.5 Million a Year.

According to the probe, the conmen offer short-term loans to old and desperate people but demand upfront payment (to act as insurance) before issuing the loan. The cons simply pocket the upfront payment without issuing any loan leaving their victims hundreds of pounds poorer. They have concealed addresses hosted abroad and bearing details cloned from respectable institutions operating in the UK.

One popular scam involves asking unsuspecting victims to purchase iTunes vouchers and send the redemption code as insurance.

Peter Elliot was a victim of the iTunes Voucher scam. The scammers promised him a £1000 loan if he bought a £200 iTunes voucher as insurance for the loan. The crooks use the voucher codes to purchase goods or sell the codes online. Peter Elliot, a dad of six, was targeted as he was looking for a short-term loan to go and visit friends during Christmas.

He handed over iTunes vouchers worth over £200 but got nothing in return. The retiree from Mexborough, Doncaster couldn’t believe he had been scammed. The scammers were so friendly and charming he couldn’t believe they conned people. Elliot admitted to feeling stupid after he was conned and blames it on being vulnerable.

In April 2018, the FCA issued an alert on loan fraud stating unsuspecting borrowers were falling for fee scams amounting to £3.5million per year. The regulator claimed incidences of fraud had increased by 44% since 2016. In 2017 alone, there were more than 4,700 loan fee swindles reported to Action Fraud.

227 enquires have been launched to investigate fraudulent lenders since 2015. According to an Action Fraud spokesman, any person required to pay upfront fees to access loans or credit services is at risk of falling prey to loan fee fraudsters. Research shows that loan fee scammers target financially vulnerable individuals who are desperate to get loans.

Research also shows that most loan fee fraud victims are 38 and above with low incomes, low credit ratings and limited access to typical credit.

Action Fraud assesses all loan fee fraud reports received and in most cases, takes action against entities breaching the watchdog’s rules.

Precautions to take

According to Resolver.co.uk expert, Martyn James, scammers emerge everywhere when money is tight. According to Martyn James, it is easier to con a person who is desperate for money because they are willing to do more.

James advices borrowers to sick to FCA regulated firms since it is easy to launch a complaint via the financial ombudsman if the regulated firm you are dealing with fails to keep their end of the deal. It is crucial to note that there are some FCA-regulated financial services firms which ask for upfront fees (approximately £50) before offering credit broking facilities. So, not all firms which ask for upfront fees are fraudulent. It is up to a borrower to choose the firm they want to deal with although; it is advisable to avoid paying upfront fees.

In case you find yourself a victim of loan fee scams, you should act immediately. If you have transferred money via your bank, call your bank immediately and request for a recall of the funds. If you have already bought vouchers, contact the firm which supplies the voucher immediately and request that the code is suspended or cancelled and claim a refund. If the firm refuses to cancel the code, launch a complaint against the firm immediately.

Loan related fraud must be acted upon immediately if you wish to get a favourable outcome. Even if you have already been conned, the least you can do is launch a complaint. Notifying the relevant authority can save someone else from a similar fraudulent scheme. It can also help apprehend the fraudsters. It is not advisable to accept and move on although most victims of fraud don’t report to avoid embarrassment.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

FCA Warning: Senseless Housing Policy Fueling High-cost Credit Rip-off

FCA boss Andrew Bailey has called out ministers for “forcing” tenants to take costly loans. According to Bailey, the social housing policy offering tenants unfurnished council homes has pushed many Brits to take high-cost loans. Bailey doesn’t see sense in offering tenants homes with no essential furnishing.

In a recent speech, The FCA Chief Executive hinted that social housing was driving tenants to take expensive debt to buy washing machines, cookers, and other household goods at three to four times the actual cost of the goods. Bailey doesn’t see sense in creating a good social housing system without providing essential fittings and furnishings. He also hinted that the FCA might fail to extend the payday loan cap to cover rent-to-own goods and doorstep lenders.

As an alternative, Bailey stated that the FCA was examining a wide range of approaches to dealing with the harm experienced by borrowers using these products. The FCA will elaborate on its views in June 2018. Bailey insists that the regulator will not necessarily use the same approaches to regulate different markets. In his speech, Bailey affirmed that the FCA is aware of the problems facing Britain’s poorest households depending on rent-to-own firms like PerfectHome and BrightHouse.

PerfectHomes is among the rent-to-own firms guilty of charging Britons exorbitant interest fees for household goods.

Brits who use high-cost credit pay more than twice the loan amount in interest and additional costs like insurance. In some cases, the cost can be five times the loan amount according to investigations by UK newspaper, The Sun.

These findings have prompted The Sun to launch a campaign meant to stop credit rip-off. The Sun is pushing for payday loan regulation to be extended to other high-cost loans. The payday loan cap has proved to be very effective according to Citizens Advice statistics which show a 50% reduction in problematic payday loans.

The FCA seems to be shifting focus on public awareness rather than cap policies given Mr. Bailey commented on the need for charities to focus on educating the public on the options available for borrowers struggling to get by.

In an interview with The Sun, Citizens Advice C.E.O., Gillian Guy stated that the FCA needs to do more to protect vulnerable Brits from falling into debt. According to her, giving vulnerable borrowers alternative credit options doesn’t help everyone or replace the urgent need for more borrower protections especially for doorstep and rent-to-own loan customers.

Landlords should be part of the solution

Sara Williams from popular money blog, Debt Camel, believes landlords can contribute to the solution by offering tenants a chance to purchase some household goods like washing machines at discounted prices or with affordable repayments. Williams recognises the possibility of doorstep and rent-to-own loans becoming difficult to manage in cases of defaults which is why she stresses on the importance of the FCA stepping in to cap total repayments when borrowers face repayment problems.

Williams insists on the need for the regulator to give lenders better guidelines i.e., on affordability to ensure those who get loans are capable of repaying them.

The C.E.O. of Joseph Rowntree Foundations, Campbell Robb shares similar sentiments. Robb sees it as unethical for low-income earners to be exploited by high-cost lenders stating that this is how people are trapped in poverty. He sees the need for more to be done to make affordable credit accessible given the UK has experienced long periods of low wages, frozen benefits and rising prices, factors which are landing many into poverty.

The Sun campaign

The Sun is demanding an end to credit rip-off. The newspaper’s demands for rent-to-own credit include; repayable costs to be capped to twice the item list prices. The Sun is also calling for a ban on sales staff incentives and discounts for existing clients to discourage them from taking more credit. Credit companies should also publish examples highlighting all costs.

For doorstep lending, The Sun wants stricter affordability checks and a cap on total fees and interest paid to match the payday loan cap, i.e., cost of loan should never exceed the amount borrowed. The Sun is also calling for a ban on discounts offered to existing doorstep loan borrowers in an attempt to lure them to take more credit.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Ministers Set Aside £800,000 for Hunting Down Illegal Loan Sharks

UK Ministers have pumped £800,000 into efforts aimed at cracking down on illegal loan sharks out to exploit the most vulnerable borrowers. Rogue lenders capitalising on desperate borrowers are going to face a fresh stringent crackdown. £100,000 of the money set aside was seized from dodgy firms. The £800k will be spent on efforts aimed at encouraging vulnerable borrowers to join credit unions instead of considering high-cost credit options.

A record £5.6 million will be availed to Illegal Money Lending Teams in the UK to fight unscrupulous lenders who target poor and desperate borrowers. The money is meant to help troubled borrowers get out of debt and stay away from lenders offering loans at ridiculously high interest rates.

An estimated 300,000 British households are indebted to illegal lenders. According to Treasury’s Economic Secretary, John Glen, “high-interest lenders are lowlife crooks who take advantage of the most vulnerable. The 300,000 Britons indebted to these illegal lenders must know we are on their side. This is why we are spending more to support the victims and fight the loan sharks.”

The news has been received positively by many including The Sun which already has a campaign pushing for a ceiling on the total cost of high-cost credit offered via rent-to-own products and doorstep loans.

In 2017, 7 million British households used high-cost credit like doorstep loans and rent-to-own products. Ministers have called on an extension of the payday loans cap to many other types of high-cost credit including credit cards.

Stella Creasy has been on record accusing high-cost lenders of “preying” on Britons who survive on insecure incomes. In a recent statement, she pleaded with ministers to borrow from the payday loan cap lessons and apply a similar cap to other loan products stating that Britain is drowning in debt.

The latest statistics indicate that there have been 380 prosecutions against illegal lenders since the IMLT (Illegal Money Lending Teams) was formed in 2004. The IMLT has written off 73 million pounds of illegal debt saving 28,000 poor borrowers from the jaws of loan sharks.

According to Peter Tutton, StepChange Debt Charity’s Head of Policy, the move by the ministers is welcome. In a recent statement, Tutton stated that the crackdown on illegal loan sharks needs to extend to the entire high-cost credit market to ease the harm experienced by many British households forced to take loans to survive. While reacting to the new efforts aimed at boosting the IMLT’s mandate, Tutton stated it is time for the UK government to seek creative and sustainable alternatives to help vulnerable households.

Why is it important to stop loan/credit rip-off

According to The Sun, no borrower should be forced to pay twice as much as they borrowed or more regardless of the type of loan product they are taking. Paying interest that is equal or more than the borrower amount is unethical in any standard.

This thinking is what inspired UK newspaper The Sun to launch a campaign pushing for a cap on the cost of doorstep loans and rent-to-own loans. The Sun is calling for a cap similar to that set on payday loans in 2015 where the total cost of loans can never exceed the loan amount.

Since the payday loan cap came into effect in the UK, the number of payday loan borrowers with unmanageable payday loan debt has decreased by over 50% according to  Citizens Advice which offers free, independent and confidential financial advice to anyone in need.

People earning the lowest incomes and living in the most poverty-stricken places are paying the steepest price for loans. Doorstep and rent-to-own loan lenders target individuals whose income isn’t enough to cover all the basic monthly household expenses. These high-cost loans are extended to individuals who have problems paying for utility bills and rent among other essential bills. The loans are also extended to borrowers who want to buy household goods like furniture.

Although the loans seem helpful, they attract exorbitant interest rates amounting to 1,500% in some cases. It is scandalous for anyone to have to borrow money for subsistence and then be forced to pay three times the loan amount.

With the IMLT funded, there is enough momentum to deal with all high-cost lenders in the UK conclusively.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.