Universal Credit arrival leads to loan shark warning

With Universal Credit having now been introduced in a lot of areas in Wales and imminently in others; ensuring that the perpetrators of illegal money lending do not prey on the most vulnerable in our societies is becoming even more important.

Universal Credit is a single monthly payment for people in or out of work, which merges together some of the benefits and tax credits that you might be getting now. Universal Credit will replace: Income-based Jobseeker’s Allowance. Income-related Employment and Support Allowance.

The change in mechanism and a possible reduction in income could see illegal money lenders, or more commonly known as loan sharks, target our communities and have a detrimental effect on individuals and families.  Universal Credit will be paid monthly and not weekly as most benefits are currently paid.  This means those claiming Universal Credit will have a larger single payment, paid in arrears; therefore potentially leaving them without money for the first few weeks.

We, as stakeholders and support organisations across Wales are doing our best to ensure that this doesn’t happen, but the worry is that some will fall through that loop.

Last week saw the conviction of two of those who prey on the most vulnerable.  When arrested, several Post Office cards were found at their home.  They would hold these as security for loans.  The loan sharks would march their victims to the cash point at 3 minutes past midnight on the day their money was due to be paid in to the account.  Then leave them with a token £5 in their account.  This left them in a position which meant that they would need to borrow even more money.  Their repayment terms were paying back double what they’d borrowed and a further doubling of the repayment if they missed a payment.  The victims concerned in this case both had learning difficulties and had been targeted by these particular loan sharks for 5 years.  The judge who convicted the loan sharks said they used ‘bullying and intimidating tactics to get payment to ensure the cycle of loansharking would continue’.  Stephen Gray, Investigations Manager at the Wales Illegal Money Lending Unit said ‘This is a particularly nasty case where vulnerable people were targeted by two ruthless loan sharks.  The interest rate is what is called ‘double bubble’.  If the payment was missed the total amount for that particular loan would double again’.

We do not want to see this kind of activity increasing and the more that people are aware of the work of the Wales Illegal Money Lending Unit, who target illegal money lenders.  The team is made up of specialist investigators and victim support officers from a variety of backgrounds, including trading standards, ex police officers and debt advisers.

We at the Wales Co-operative Centre have worked in partnership with the Wales Illegal Money Lending Unit for a number of years and we promote their work through all our Financial Inclusion Projects.  We’ve also arranged and facilitated specific training sessions where frontline workers can see the work the Unit does.  We’re also doing this in partnership with the North Wales Credit Union which should be promoted as an affordable credit option, not just for those who are financially excluded but to everyone.

As Financial Inclusion Champion for North Wales, I’m currently working with the Unit on an event they will be holding in Rhyl in December.  This event, in partnership with Communities First, Citizens Advice Bureau, the local Credit Union and the local authority will be held in a Communities First area of Rhyl and will feature a range activities for local people.  The event is called ‘Lenny & Lottie’s Christmas Party’.  Lenny & Lottie are loan shark characters used by the Unit to promote their work.

But before and after all this happens we all need to be mindful of what’s happening in our communities and who is targeting our most vulnerable.  If you or someone you know is being affected by loan sharks, you can contact the 24 hour hotline for help and support – 0300 123 3311.

Plus, you can access the Money Made Clear Wales (MMCW) website for any information you need with regard to managing money.  The website was developed by the Wales Co-operative Centre in partnership with Welsh Government.

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