“Loan sharks are circling”, doorstep lender reportedly tells the Guardian

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“Loan sharks are circling”, doorstep lender reportedly tells the Guardian

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Author Lauren Howells

In an interview with the Guardian this week, Paul Smith, chief executive of doorstep lender Morses Club, reportedly told the paper that loan sharks were preying on vulnerable people in council estates, who were struggling to make ends meet.

Smith reportedly said that loan sharks were operating in the same places as their (Morses Club’s) customers lived and often frequented the same drinking establishments and betting shops.  

Charity reveals rising debt levels

This interview comes as debt charity StepChange announced that the proportion of its clients who were struggling to cover their essential household bills, has exceeded 40% for the first time.

Mike O’Connor, Chief Executive of StepChange Debt Charity said: 

“Demand for debt advice is at record levels. The people we help are increasingly struggling just to meet their essential household bills and debt levels are now once again on the rise after an eight-year decline. Personal debt must now become a priority for Government.”

 The charity also revealed that increasing numbers of under the 40s, lone parents and people in rented accommodation were seeking its help.

Concerns about FCA price cap helping loan sharks 

Concerns have been raised for some time now that the price cap on payday lenders, imposed by the Financial Conduct Authority in 2015, could have contributed to an increase in illegal lending.

Earlier this summer, a story broke that the FCA was reportedly lifting its price cap on short-term loans, a claim which the FCA denied.

The FCA recently announced that it had decided to leave the existing payday loan price cap in place after finding “clear evidence” that the FCA regulation of high-cost-short-term credit had delivered “substantial benefits to consumers”. This will be reviewed again in 2020.

With regards to the outcome of its review into high-cost credit, Andrew Bailey, Chief Executive of the FCA, said: “High-cost credit products remain a key focus for us because of the risks they pose to potentially vulnerable customers.  We are pleased to see clear evidence of improvement in  the payday lending market after a period when firms’ treatment of customers and their business models were often unacceptable.”

Smith reportedly told the Guardian price caps had “not worked” as intended

In his interview with the Guardian, Smith reportedly said that the FCA price caps hadn’t worked in the way that they were supposed to. He allegedly went on to say that the FCA had a misconception that consumers had simply “tightened their belts” and “stopped their behaviour”. However, Smith reportedly said that he didn’t believe that this was the case.

Money Advice Service releases ‘indebtedness figures’ for the UK

Earlier this week, the Money Advice Service revealed that 8.3 million adults in the UK were living with problem debt, with Newham, London, revealed as the UK’s most over-indebted local authority area, at 22.7%. 

Newham was closely followed by Tower Hamlets at 22.7% and Sandwell in the East Midlands at 22.1%.

The lowest proportion of over-indebted residents were found to be in East Dorset (9.7%) and the Mole Valley in Surrey (9.9%).

Sheila Wheeler, Director of Debt at the Money Advice Service said:

“This research tells us that one in six people in the UK has financial worries, a figure that stands at over 8.3 million. Debt is a complex challenge and one that needs a collaborative approach if we are to successfully address it.” 

By | 2018-05-30T10:07:35+00:00 September 22nd, 2017|Personal Finance|0 Comments

About the Author:

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After completing her law degree, Lauren decided to follow her passion for writing. She regularly contributes articles to CLNews on personal finance and general consumer topics.

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