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ABCUL comments on new funding to tackle loan sharks

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27 Apr 18

HM Treasury this week announced new funding in the fight against loan sharks, including new money to promote the role of credit unions.

This week saw HM Treasury announce new funding for the Illegal Money Lending Team of £5.5 million to help with the fight against loan sharks.  Treasury also announced £100,000 of money confiscated from loan sharks under the Proceeds of Crime Act to help promote credit unions as a responsible, regulated alternative to loan sharks. 

Responding to the announcement, ABCUL Head of Policy & Communications, Matt Bland, said: “It was great to see the announcement of extra funding for the fight against loan sharks this week.  Many credit unions work with the Illegal Money Lending Team across the country to encourage local people to come to them before ever taking the dangerous step of borrowing from an unlicensed lender.

“The extra money to promote the role of credit unions will help keep more people out of the clutches of loan sharks.  But credit unions have a broader role to play in providing an ethical and affordable alternative source of credit and savings facilities than simply in relation to the fight against loan sharks.  We look forward to continuing our work with HM Treasury, the wider government and the regulatory authorities to expand credit unions’ important role.

“In particular, we saw Gareth Thomas MP, Chair of the Co-operative Party, this week convene a debate on capitalising co-operative societies.  This was a timely intervention in the same week as Lloyds Banking Group announced a further million pound for its Credit Union Development Fund, taking the total committed investment to £5 million.

“Figures so far show that the Lloyds investment has already had a 6-fold leverage effect in terms of new lending by recipient credit unions which stood at almost £12 million for £2 million invested in September 2016.  This demonstrates how targeted capital investment can radically boost the lending capacity of credit unions in communities that really need it. 

“Along with targeted legislative reforms and continued proportionate regulation, these interventions will deliver more affordable and ethical finance for communities at risk of financial exclusion, suffering overindebtedness and at risk of falling prey to loan sharks.”

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