Governance
Unlicensed lenders fill void |
|
|
| Governance | |
| Written by Gary Howes | |
| Wednesday, 27 May 2009 | |
|
Decline in traditional lending and sub prime lending opens door to 'loan shark' lenders.
The New Local Government Network has warned that 200,000 people in Britain are at risk from illegal lenders as access to credit from traditional lenders is in decline. The report predicts that an additional 35,000 people are likely to have to use loan sharks during the recession but admit that the figure could be even higher. The think tank is urging local authorities to put additional resources into local credit unions and even to use new Council Banks to offer affordable credit to people who can’t access high-street loans. NLGN warns that the legal sub-prime market has declined since the recession. The demise of the sector has been embodied by the woes being suffered at Cattles (LON:CTT) one of the biggest door to door lenders in the UK. The company last month had to withdraw from the FTSE as management sought to fill a financial black hole. The report warns that customers who would have previously used these services may now have to turn to loan sharks. It argues that local authorities need to step in to protect vulnerable people in their local community by offering a range of support including more Credit Unions, mapping predatory lending and enhancing enforcement against loan sharks. Author of the report, Chris Leslie says that: “There is evidence to suggest that the pernicious trend of illegal unsecured lending at extremely high rates of interest, or ‘loan sharking’, is making a comeback. The diminished availability of regulated sub-prime credit is creating conditions where a sizable number of people have little option but to borrow from illegal sources. At least 165,000 people already use loan sharks in the UK and we can expect the number to rise sharply.”
|
|
Digg it! 
del.icio.us 
Newsvine 
Reddit 
Stumble It! 
