Heart of the South West Trading Standards is urging people facing financial difficulties to steer clear of illegal money lenders.
As the cost-of-living crisis continues to force many people to take difficult decisions, some may become prey to loan sharks who exploit desperation and lock people into a cycle of debt.
Steve Gardiner, Trading Standards Manager at Heart of the South West, told BBC Radio Devon, “They call them loan sharks for a reason – they circle when you’re in trouble.
“With the rising costs of living, there is a danger of people turning to loan sharks for extra cash, and in other areas of the country, that has been quite a significant problem,” he added.
What can at first appear to be a legitimate offer of help can soon spiral into a nightmare of intimidation and high interest rates. “Some of the interest rates they charge, in terms of our normal Annual Percentage Rate (APR) can be absolutely extraordinary – over a thousand per percent APR – and that’s way above what a commercial operation would offer,” said Gardiner.
“A typical way of spotting them, is that they don’t have documentation. Anyone who offers, or brokers credit, has to be registered with the Financial Conduct Authority, so that’s what you need to look for.”
Asked what the options are for people who are struggling with money, he said: “Banks and building societies are available to most people to borrow money from. But if you can’t do that, there are Credit Unions, which are not for profit organisations run on a cooperative basis, that can lend to people.”
Gardiner’s comments came during Talk Money Week, an initiative set up by the Money and Pensions service to encourage open conversations about money matters. Research suggests that talking about financial problems can help alleviate anxiety and make better financial decisions.
If people are already dealing with a loan shark, Gardiner advised: “Talking about it is one of the key issues in this situation. People are often very reluctant to talk about their financial predicament, but the Illegal Money Lending Team have hotlines and a website with trained advisors who can talk with people about their financial situation and can help them through what can be a real financial crisis.”