‘Vulnerable’ consumers need protection from loan sharks
Licensed money-lenders should be more rigorously regulated, and those lenders operating without a licence should be better policed.
That’s the view of the National Consumer Council, which today launched its campaign to encourage the Government to introduce an ombudsman service for consumers that is free and easy to use.
The campaign comes in response to the Dti’s review of the 30-year-old Consumer Credit Act.
The NCC insists that many people are exploited by unscrupulous lenders and have little protection when things go wrong.
Frances Harrison, head of research, policy and development at the NCC said: “One in five adults is denied access to credit from regular lenders, such as banks, building societies and finance houses – and they may turn to credit dealers who often exploit their need for a quick and easy loan.”
The NCC is recommending a driving licence-style scheme, whereby money-lenders can be fined and receive ‘points’ when they act unfairly – resulting in licence removal if a trader is pulled up more than three times.
This would go hand-in-hand with better enforcement of the licensing system and stricter checks on the 30,000 new licence applications and renewals that are received each year.
But the organisation has also called for a focus on better alternatives for people on lower incomes who find it difficult to access credit. It claims the Government needs to do more to support credit unions and social fund loans in order to keep people away from loan sharks.
Even legitimate lenders have been reported to have charged interest rates well in excess of 100%, while loan sharks can charge up to 300%, leading the NCC also to call for the OFT to be given greater resources in order to bring about more prosecutions for unfair lending.
