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Loan sharks bite in recession Loan sharks bite in recession
(about 10 hours later)
by Caroline Hawleyby Caroline Hawley
An Operation Sharkbait police officer's stab-resistant vest An Operation Sharkbait police officer's stab-resistant vest href="/1/hi/programmes/newsnight/7920559.stm">Full Newsnight report
It is 6.30 in the morning at a West London police station.It is 6.30 in the morning at a West London police station.
Police and investigators from London's Illegal Money Lending Team are making final preparations for a joint raid on a suspected loan shark.Police and investigators from London's Illegal Money Lending Team are making final preparations for a joint raid on a suspected loan shark.
As dawn approaches they set off.As dawn approaches they set off.
The officers are wearing stab vests bearing the Operation Sharkbait logo and are armed with an enforcer, a special tool that puts three tonnes of kinetic energy through a door.The officers are wearing stab vests bearing the Operation Sharkbait logo and are armed with an enforcer, a special tool that puts three tonnes of kinetic energy through a door.
The suspect they are after is, according to intelligence, "volatile".The suspect they are after is, according to intelligence, "volatile".
She is alleged to have loaned more than £1m at extortionate rates to hundreds of victims over several years, and to have seized some of their identity documents.She is alleged to have loaned more than £1m at extortionate rates to hundreds of victims over several years, and to have seized some of their identity documents.
A profitable timeA profitable time
No-one knows exactly how many loan sharks are operating around the country, it is, after all, a criminal activity.No-one knows exactly how many loan sharks are operating around the country, it is, after all, a criminal activity.
I was frightened for my life. They said... 'First we will kill your wife and your son, and then your daughter. You will see, everyone from your family will be killed' Loan shark victimI was frightened for my life. They said... 'First we will kill your wife and your son, and then your daughter. You will see, everyone from your family will be killed' Loan shark victim
But hundreds of thousands of people are thought to be using them and, as the recession bites, no-one doubts that the numbers are rising.But hundreds of thousands of people are thought to be using them and, as the recession bites, no-one doubts that the numbers are rising.
"As people find themselves in more and more dire straits, they'll look to any source of income," says David Sayer, head of the Illegal Money Lending Unit in the north-east of England."As people find themselves in more and more dire straits, they'll look to any source of income," says David Sayer, head of the Illegal Money Lending Unit in the north-east of England.
"There will now be new people needing the services of loan sharks. It's a profitable time for them. We think there's an awful lot more of it going on.""There will now be new people needing the services of loan sharks. It's a profitable time for them. We think there's an awful lot more of it going on."
And he says he hears "horror stories" from his investigators.And he says he hears "horror stories" from his investigators.
"We've had a sexual assault on a woman with special educational needs, and there are other examples of people being sexually assaulted.""We've had a sexual assault on a woman with special educational needs, and there are other examples of people being sexually assaulted."
VictimsVictims
The most common victim is, according to Sayer, a young single mother.The most common victim is, according to Sayer, a young single mother.
A loan shark's notebook documenting alleged loans and interest rates An officer on a raid, armed with a special 'enforcer' battering ram
"We've had incidents of children being followed by the loan shark," he says."We've had incidents of children being followed by the loan shark," he says.
"We have had stories of people hiding behind the furniture with the lights out because the loan shark is at the door."We have had stories of people hiding behind the furniture with the lights out because the loan shark is at the door.
"Sat there with their hands over their children's mouths, so the house appears to be empty and the children aren't making a sound.""Sat there with their hands over their children's mouths, so the house appears to be empty and the children aren't making a sound."
Many victims are too scared to talk about their ordeal.Many victims are too scared to talk about their ordeal.
"I was frightened for my life," one victim who doesn't want to be identified told the BBC."I was frightened for my life," one victim who doesn't want to be identified told the BBC.
"They said you need to remember that you will be killed last. 'First we will kill your wife and your son, and then your daughter. You will see, everyone from your family will be killed.'"They said you need to remember that you will be killed last. 'First we will kill your wife and your son, and then your daughter. You will see, everyone from your family will be killed.'
"I was so stressed I got ill and had to spend eight days in hospital.""I was so stressed I got ill and had to spend eight days in hospital."
Brisk businessBrisk business
Loan sharking has been around for centuries, in an often hidden world.Loan sharking has been around for centuries, in an often hidden world.
I don't know where I would be without them because I can't get money from the bank, but I feel that they have had a lot of my blood KathI don't know where I would be without them because I can't get money from the bank, but I feel that they have had a lot of my blood Kath
But investigators in London say that, with the credit crisis deepening, they are now seeing a new type of victim.But investigators in London say that, with the credit crisis deepening, they are now seeing a new type of victim.
"Traditionally, people think of a loan shark victim as perhaps someone who doesn't have financial skills, and lives in an area of deprivation," says Peter Richardson, head of London's Illegal Money Lending Unit."Traditionally, people think of a loan shark victim as perhaps someone who doesn't have financial skills, and lives in an area of deprivation," says Peter Richardson, head of London's Illegal Money Lending Unit.
"We're coming across people who are the opposite to that."We're coming across people who are the opposite to that.
"They perhaps own or rent a home, rather than having social housing, so they've definitely been able to access credit in the past, but because of multiple legal debt issues, they are now unable to.""They perhaps own or rent a home, rather than having social housing, so they've definitely been able to access credit in the past, but because of multiple legal debt issues, they are now unable to."
Loan sharks are not the only winners in these dark financial times.Loan sharks are not the only winners in these dark financial times.
Doorstep lenders and pawnbrokers are also doing brisk business.Doorstep lenders and pawnbrokers are also doing brisk business.
"We're busier than ever," says George Smith, manager of Cash Converters in Stockton-on-Tees."We're busier than ever," says George Smith, manager of Cash Converters in Stockton-on-Tees.
"We're seeing an increase in new customers right across the social scale. People are losing their inhibitions about coming in and selling us goods. We're getting people coming in that two years ago would not have dreamt of coming into a Cash Converters store.""We're seeing an increase in new customers right across the social scale. People are losing their inhibitions about coming in and selling us goods. We're getting people coming in that two years ago would not have dreamt of coming into a Cash Converters store."
The door-to-door lending industryThe door-to-door lending industry
Legal doorstep lenders appear to be busy as well.Legal doorstep lenders appear to be busy as well.
Police raid on the home of a suspected "volatile" loan sharkPolice raid on the home of a suspected "volatile" loan shark
"I've personally seen about five or six doorstep lenders in the past week targeting my estate," says Maurice Clarkson, a community activist in the Stockton area."I've personally seen about five or six doorstep lenders in the past week targeting my estate," says Maurice Clarkson, a community activist in the Stockton area.
"They're already speaking to people about loans for next Christmas.""They're already speaking to people about loans for next Christmas."
Kath, who has three separate loans with Provident, the country's biggest home credit business, has some advice for anyone tempted to take out such a loan.Kath, who has three separate loans with Provident, the country's biggest home credit business, has some advice for anyone tempted to take out such a loan.
"Resist the temptation.""Resist the temptation."
On a recent loan of £500, she will have to pay back £855.On a recent loan of £500, she will have to pay back £855.
"I don't know where I would be without them because I can't get money from the bank, but I feel that they have had a lot of my blood.""I don't know where I would be without them because I can't get money from the bank, but I feel that they have had a lot of my blood."
"Morally, I disagree with it. And I'm a fool to myself for taking it out," she says."Morally, I disagree with it. And I'm a fool to myself for taking it out," she says.
"They feed off people's misery, but they do it in a very nice way, up front. And we are conned by it. When you are desperate you will do anything. A drowning man will clutch at a straw. So someone who needs money for a present or a funeral will take out the loan.""They feed off people's misery, but they do it in a very nice way, up front. And we are conned by it. When you are desperate you will do anything. A drowning man will clutch at a straw. So someone who needs money for a present or a funeral will take out the loan."
National helplineNational helpline
Provident is by no means alone in the industry, in charging high repayment rates.Provident is by no means alone in the industry, in charging high repayment rates.
In a statement, it has defended its charges.In a statement, it has defended its charges.
It said:It said:
"Provident fixes the costs of its home credit products to cover the costs of the high service levels the product provides which include weekly calls at customers' homes to collect repayments, and no extra chargers whatsoever if customers miss repayments and so take longer to repay their loan. The total fixed charge for a typical loan per £100 borrowed is £71.""Provident fixes the costs of its home credit products to cover the costs of the high service levels the product provides which include weekly calls at customers' homes to collect repayments, and no extra chargers whatsoever if customers miss repayments and so take longer to repay their loan. The total fixed charge for a typical loan per £100 borrowed is £71."
Credit unions are now being widely recommended by financial advisers as an alternative to both legal and illegal doorstep lenders.Credit unions are now being widely recommended by financial advisers as an alternative to both legal and illegal doorstep lenders.
And investigators trying to combat loan sharks stress that because the activity is illegal, debts to loan sharks do not have to be repaid.And investigators trying to combat loan sharks stress that because the activity is illegal, debts to loan sharks do not have to be repaid.
A new national hotline is now being set up that can be called from anywhere in the country to report loan sharks.A new national hotline is now being set up that can be called from anywhere in the country to report loan sharks.
The number is 0300 555 2222.The number is 0300 555 2222.
Caroline Hawley's film was on Newsnight on Monday, 2 March, 2009 at 10.30pm on BBC Two and on the Newsnight website.Caroline Hawley's film was on Newsnight on Monday, 2 March, 2009 at 10.30pm on BBC Two and on the Newsnight website.