Wales’ loan shark problem: ‘horrible’ interest charges in the form of violence, blackmail and kidnapping used to enforce loans

Loan sharks in Wales are targeting disabled and vulnerable people with “horrific” interest charges and threats of violence.

Illegal moneylenders are resorting to violent tactics including assault, blackmail and even forcing the victims of kidnapping to pay back their debts.

While many loan sharks use traditional community links such as chatting in church groups or school gates to trap potential victims, some now openly advertise loans on social media.

With the cost of living expected to rise in April, with national insurance and energy bills rising, the Welsh team fighting loan sharks is expecting their workload to increase.

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A loan shark is someone who lends money without authorization from the Financial Conduct Authority regulator. They often appear friendly and helpful initially, but may then turn to violent and aggressive behavior to force victims to repay loans with hefty interest and default fees.

A small team based in Barrie, in the Valley of Glamorgan is tasked with investigating and prosecuting loan sharks and supporting victims with their loans and potentially helping them relocate when they feel unsafe at home. The Wales Illegal Money Lending Unit (WIMLU), established in 2008, recently gave councilors in the Vale oversight of their work.

Liz Emmons told the Glamorgan Council of Inquiry Committee of Homes and Safe Communities in the Valley of the Unit’s work during a meeting on Wednesday, January 12.

She said: “We prosecute for illegal lending but additional crimes we prosecute include assault, criminal damages, kidnapping and blackmail. They are all means that a loan shark can use to obtain that repayment. Will do what he’s looking for.

“They will usually target vulnerable individuals because clearly they see them as easy prey. This is an extremely reprehensible crime. It is not spontaneous – a loan shark will find that someone is having financial problems and They will target those individuals.

“Over a 12-month period we found that 85% of loan shark victims had either a recognized physical or mental disability. This is the nature of loan sharking: They are looking for people to exploit.”

According to Ms. Emmons, often the interest charges will be similar to the initial money borrowed, but can quickly add up to much, even reaching a 600,000% APR.

“The interest and default charges are shocking,” she said. “We hear the phrase over and over again: ‘They said it was a double bubble’. So you borrow £50 and you have to pay £100. If you can’t pay £100 I have one Will be £20 a week unless you can give me a lump sum. And on it goes. That means the interest charges go up horribly.”

An example of a loan shark prosecuted by the WIMLU was a man in Caerphilly who had tens of thousands of pounds in cash in pillow cases and who had taken benefit payments from an elderly couple for a decade before being caught. Most of the money earned by him was returned to the victims under the proceedings of the Crime Act.

Often loan shark victims are already known to friends or neighbors, pub bouncers, or drug dealers, or even church groups and school gates. However many people are now getting online using social media networks like Facebook or Reddit to advertise loans.

“I am afraid that in Wales what we usually find is this old-fashioned relationship within our communities,” Ms Emmons said. “When I talk to loan shark victims they will say: ‘She was my nephew’s friend’ or ‘My ex-husband used to play darts with her.’ There would be these kinds of community links.

“It could be a friendly woman you know through a church group or even at the school gate who says: ‘Listen love, I know there’s a problem, I know you’re short of cash, I can help’. The term ‘grooming’ describes a lot of loan shark activity.”

Cash-crunched users on a Subreddit can post a demand for money and post lenders asking whether borrowers have repaid the loan or not, with vague threats to “recover the money” if not paid. with. Similar groups are also present on Facebook, where lenders are posting their phone numbers and asking borrowers to contact them on WhatsApp if they need loans.

The pandemic has made the problem worse in Wales, Ms Emmons said, as many people have lost their jobs or are struggling with their health. And as the cost of living is expected to rise significantly later this year, his team is set to increase their workload as well.

She said: “I was recently in a cross-border meeting with my counterparts in Scotland and England and we all have a slight feeling that we are adopting a brace position because of the Covid impact, covid in all our countries. Economic results, just spoiled everything.

“Covid has divided the country into those who are better off and working from home and those who have lost their jobs, whose health has been affected, and all these factors. It is possible that there is going to be an increase in work for all of us. I don’t think we will be short of work.”

The WIMLU is currently conducting four investigations into suspicious loan sharks in the Valley of Glamorgan, but this is likely “the tip of the iceberg”, with many more operating unscheduled and illegal money lending believed to be widespread across Wales.

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

Any concerned person can report a doubtful loan shark by calling the 24-hour confidential helpline on 0300 123 33 11. WIMLU also offers free training to raise awareness of loan sharks and how to recognize the signs of potential victims.

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