John Glen is Economic Secretary to the Treasury, and is MP for Salisbury.
Protecting consumers will always be a lodestar in the Government’s approach to policy-making. In January, in my first week as Economic Secretary to the Treasury, we banned surcharges for all payment methods across the board – going well beyond the minimum required by the EU directive.
Now today, I’m pleased to announce that we are increasing funding to tackle the persistent problem of loan sharks – a scourge on the most vulnerable people in our society.
Illegal lenders are a blight on our communities, often charging very high rates of interest, and using intimidation or even violence to aid the collection of repayments. Such lenders will typically target vulnerable people in our towns and cities; those without easy access to legal forms of credit.
It is estimated that over 300,000 people in the UK are in debt to illegal money lenders. Since the Illegal Money Lending Team (IMLT) was established in England in 2004, over 380 prosecutions have been made, with over £73 million of illegal debt written off, and 328 years of jail sentences have been handed out. Similar teams to tackle this issue also exist in Scotland and Wales.
These three teams work alongside the Financial Credit Authority (FCA) to enforce the consumer credit market, but also have wider powers to tackle the criminality associated with the conduct of loan sharks. While the Government is pleased that these teams have been tackling this issue, we recognise that more needs to be done to help us get on top of the problem.
We are therefore today launching a fresh crackdown on loan sharks. This year we will be providing £5.67 million to IMLTs, a significant 16 per cent boost on the previous year. This budget increase will help us better investigate and prosecute illegal lenders, as well as provide support for those who have been victims of loan sharks.
For the first time, we will also be tackling the issue in Northern Ireland through a new education project which will support vulnerable communities and increase awareness of the dangers that loan sharks pose. This will be led by the Consumer Council, while the Police Service of Northern Ireland (PSNI) will also receive funding for the creation of a new post within the Paramilitary Crime Task Force – a specialised officer who can lead on tackling loan shark activity.
Not only are we taking action against illegal lenders and supporting victims of criminality, but we will be proactively creating the conditions to reduce opportunities for loan sharks in the future. In this financial year, the England IMLT will be spending up to £100,000 of money seized from loan sharks to help incentivise communities at risk of being targeted by illegal lenders to join a credit union. This quadruples the funding devoted to this activity in 2016/17, and will enable an increasing number of consumers to access legal forms of credit and avoid the trap set by loan sharks.
This announcement today builds on earlier work undertaken by the Government, and is another important step in ratcheting up the pressure on those who prey on the most vulnerable people in our communities. In 2016, we introduced a ringfenced FCA levy on consumer credit companies to help fund action against illegal lenders, and in the 2016 Autumn Statement we pledged to expand the scheme that utilises funds seized by loan sharks.
I am particularly pleased that we will be increasing our focus on encouraging people to join credit unions – taking the most vulnerable out of the clutches of loan sharks by providing a safe and legal option for those in need of credit.
As Conservatives, we need to demonstrate we are building an economy that does not just create conditions for our world-leading financial institutions to flourish, but protects and defends people who have historically been left behind without access to legal credit. As Economic Secretary to the Treasury and City Minister, I am determined that we will take the fight to the loan sharks.
For too long in the past, we have been guilty of letting the opposition do all the running on this issue; it’s now time we step up the pace and do all we can to put the loan sharks out of business.