Loan shark problem in Wales: ‘Horrible’ interest charges as violence, blackmail and kidnappings are used to enforce debts

Loan sharks in Wales are targeting disabled and vulnerable people with ‘horrendous’ charges of interest and threats of violence.

Illegal money lenders use violent tactics, including assault, blackmail and even kidnapping, to pressure victims into repaying their loans.

While many loan sharks use traditional community ties, like church groups or school doorsteps, to trick potential victims, some are now openly advertising loans on social media.

With the cost of living set to rise in April as national insurance and energy bills rise, the Welsh loan shark team expect their workload to increase.

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A loan shark is someone who lends money without the permission of the regulator, the Financial Conduct Authority. They often tend to initially appear friendly and helpful, but then may engage in violent and aggressive behavior to force victims to repay loans with huge interest and default charges.

A small team based in Barry in the Vale of Glamorgan are tasked with investigating and prosecuting loan sharks and supporting victims with their debts and possibly helping them move if they feel unsafe at home. The Wales Illegal Money Lending Unit (WIMLU), set up in 2008, recently handed a review of its work to Vale advisers.

Liz Emmons briefed Vale of Glamorgan Council’s Safe Homes and Communities Oversight Committee on the unit’s work at a meeting on Wednesday January 12.

She said: “We are prosecuting for illegal loan, but the additional offenses we are prosecuting include assault, criminal damage, kidnapping and blackmail. These are all ways a loan shark will use to get the refund they seek.

“They will generally target vulnerable people because they frankly see them as easy victims. This is an extremely cynical offense. It’s not random – a loan shark will know someone is in financial trouble and will target those people.

“Over a 12-month period, we found that 85% of loan shark victims had a recognized physical or mental disability. That’s the nature of loan sharking: they’re looking for people to exploit.

Often the interest charges will be the same as the original money borrowed, but can quickly climb much higher, even reaching up to 600,000% APR, according to Ms Emmons.

“The interest and default charges are shocking,” she said. “We hear the phrase over and over again: ‘He said it was a double bubble.’ So you borrow £50 and you have to repay £100. If you can’t repay the £100, I’ll have £20 a week until you can give me the lump sum. And it continues. This means that interest charges add up horribly.

One example of a loan shark being prosecuted by WIMLU was a Caerphilly man who had tens of thousands of pounds in cash in pillowcases and took benefits from an elderly couple for a decade before being arrested. Much of the money he earned was then returned to victims under the Proceeds of Crime Act.

Often the loan sharks are already known to the victims as friends or neighbors, pub bouncers or drug dealers, or even through church groups and at the school gate. However, many are now moving online using social media networks like Facebook or Reddit to advertise loans.

“I fear that in Wales we generally find that it’s the old-fashioned ties within our communities,” Ms Emmons said. “When I talk to victims of loan sharks, they say, ‘She was a friend of my nephew’ or ‘My ex-husband used to play darts with him.’ There will be those kinds of community ties.

“It could be a friendly woman you know through a church group or even at the school gate saying, ‘Listen honey, I know there’s a problem, I know that you lack money, I can help you. The word “grooming” describes many activities of loan sharks. »

On a Subreddit, cash-strapped users can request money and lenders say whether borrowers have repaid the loan or not with unclear threats to ‘get the money back’ if not paid . Similar groups also exist on Facebook with lenders posting their phone numbers and telling borrowers to contact them on WhatsApp if they need a loan.

The pandemic has made the problem worse in Wales, Ms Emmons said, as many people lost their jobs or had health problems. And with the cost of living expected to rise significantly later this year, his team is also preparing for an increase in workload.

She added: ‘I was recently at a cross-border meeting with my counterparts in Scotland and England and we all feel a bit like we’re taking the back-up position because across all of our nations the impact of Covid, the economic consequences of Covid, just made things worse.

“Covid has divided the nation between those who are better off and working from home and those who have lost their jobs, whose health has been affected, and those are all factors. It is likely that there will be an increase in work for all of us. I don’t think we’re going to run out of work.

WIMLU is currently carrying out four investigations into suspected loan sharks in the Vale of Glamorgan, but this is likely to be only the ‘tip of the iceberg’ as many other undetected and illegal moneylenders are believed to be widespread throughout Wales.

“We are an intelligence-led unit and we need information to get to us, Ms Emmons said. “If you suspect usurious activity, the best way to get in touch is our helpline number.”

Anyone with concerns can report suspected loan sharks to a confidential 24-hour helpline by calling 0300 123 33 11. WIMLU also offers free training to raise awareness of loan sharks and how to spot the signs of potential victims.

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