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March 4, 2009

Government launches loan shark hotline

by Gill Montia

Story link: Government launches loan shark hotline

The Government has launched a national helpline and text messaging service for people who become the victims of loan sharks.

As the recession and credit crisis continue to bite, more people in desperate financial straits and those with poor credit histories will be tempted to borrow at the exorbitant interest rates charged by unlicensed moneylenders.

At worst they can become the victims of violence or threats of violence, if they are unable to pay.

The Department for Business, Enterprise and Regulatory Reform (DBERR) is behind a new scheme which allows consumers to make one phone call and “shop” illegal operators.

Illegal money lending teams across the UK have already brought many successful prosecutions, having been established in 2007.

Their work is now being complemented by a confidential national hotline (0300 555 2222) and a text messaging service on 60003.

According to government research, a loan from a loan shark is, on average, three times the cost of the same loan from someone operating legally.

Interest rates of between 8000% and 117,000% have been uncovered.

However, any loan made by someone without a licence is “unenforceable”, meaning the borrower cannot legally be made to pay it back.

 

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