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Loan sharks could take advantage of payday lending caps, according to CAB


Loan sharks could take advantage of payday lending caps, according to CAB

DEBT ADVICE: Darlington Citizens Advice Bureau’s Dawn Gill and Neeraj Sharma

First published in News by Joanna Morris

LOAN sharks could cash in following caps on payday lending, according to the Citizens’ Advice Bureau.

Caps limiting the interest rate and fees instated by so-called payday lenders have been introduced by the Financial Conduct Authority in a bid to protect people struggling with debt.

As of Friday, January 2, companies such as Wonga – who previously had annual interest rates higher than 5,000 per cent – must comply with regulations that will see interest and fees capped at 0.8 per cent per day.

Under the new rules, the total cost of a loan will be limited to 100 per cent of the original sum and default fees will be capped at £15.

While the move has been welcomed by the Darlington Citizens Advice Bureau (CAB), the organisation has warned the changes may cause more vulnerable people to fall prey to loan sharks.

Darlington CAB’s Dawn Gill expressed fears that loan sharks could take advantage of those now unable to access as much money as they need.

She said: “Caps are a good thing but clients will still want money from somewhere – they’re being protected from high interest rates but companies may not lend as much.

“They may not be able to get as much as they were expecting or anything at all.

“If they don’t get what they want, they are in danger of reaching out to someone like a loan shark instead of coming to us, for example.

“We haven’t seen it happen yet but the changes are still new and it’s a worry.”

Ms Gill urged payday lenders to work with CABs in order to help their clients manage their finances.

She said: “The ideal situation would be for payday lenders to refer their clients to us before they take out a loan at all and let us help them to maximise and manage their income.

“I’d advise people to come to us and let us help them find ways to manage.

“We can help with benefits, cutting energy bills or working out incomings and outgoings and priorities.

“There are a lot of people prioritising paying back intimidating people who knocked at their door with money rather than paying their rent or council tax but they could end up losing their home.”

To anonymously report a loan shark, contact the Illegal Money Lending Team by emailing reportaloanshark@stoploansharks.gov.uk or calling 0300-555-2222.

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Cash from convicted loan shark Giovanni Caruso is invested in charitable organisations

COMMUNITY PROJECTS: From the left, Lewis Barkway, from the YMCA, Diane Bradshaw, project leader for Potteries Moneysense at the CAB, mascot Glenda The Lender, and Sarah Honeysett, from Potteries Gold at the CAB. Picture: Malcolm Hart

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ILLEGAL cash hoarded by convicted loan shark Giovanni Caruso is being invested in community projects across the Potteries.

The 41-year-old, of Foley Street, Fenton, was jailed for four-and-a-half years in April, 2012 after being convicted of seven charges.

They included being an illegal money lender and blackmail.

He collected some £360,000 from 188 victims in just 18 months.

Caruso is due to appear at Stoke-on-Trent Crown Court in March for an examination of his finances.

Meanwhile, some of the money made from his illegal activities is being split between local charitable organisations after members of the public voted for the causes they wanted to see benefit.

Groups including Stoke-on-Trent Citizens Advice Bureau and YMCA North Staffordshire launched bids for a share of the cash, via the government-funded England Illegal Money Lending Team.

The winner of the top amount, Potteries Money Wise, was handed a cheque for £1,000 yesterday at Hanley Community Fire Station.

The team won with 93 votes with their idea of producing a free recipe book full of cheap and healthy recipes to help families on low incomes to eat a healthy diet.

Diane Bradshaw, project leader at Potteries Money Wise, said: “From the clients that we see we know that they struggle.

“We thought that we could help a lot of people to eat healthily on a low income.”

The recipes include meals such as soups that are cheap to make and easy to store and freeze.

Diane added: “We got a great response and we are going to produce 500 copies.”

Olivia Walker, who works with Diane, said: “We come across a lot of people who are being referred to foodbanks.

“We decided to devise affordable recipes with meals costing as little as 70p.

“A lot of people are not getting the right nutrients and living on things like Pot Noodles.”

Cath Williams, a manager at the England Illegal Money Lending Team, said: “Money from convicted loan sharks is invested into educating future generations to not use loan sharks. There are some really good projects that I think will make a massive impact.

“We have run dozens of projects nationally but decided to focus on Stoke-on-Trent after Mr Caruso was arrested.”

Stoke-on-Trent CAB will be using their £500 awarded to produce leaflets advising Jobseeker’s Allowance how to manage their cash.

Chief executive of Staffordshire North and Stoke-on-Trent CAB Simon Harris said: “We try to use the proceeds from crime to plough back into the community.”

YMCA North Staffordshire is using the money to pilot a ‘jam jar account’ to support cash-strapped young people. Money in the account will go directly to landlords via direct debit to pay for their rent.

[…]

New CAB campaign warns of payday loan dangers – Newbury Today

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New CAB campaign warns of payday loan dangers

Saturday, 12th Oct 2013


Reporter: Dan Cooper Reporter

Email: dan.cooper@newburynews.co.uk
Contact: 01635 886632

WEST Berkshire Citizens Advice Bureau has launched a new campaign to raise awareness of the dangers of payday loan providers.

The payday loans consumer education campaign, which will run until January, was formally launched at the bureau’s annual meeting last week by chief executive Jan Rothwell and West Berkshire Council’s Trading Standards manager, Sean Murphy.

Days later, the Financial Conduct Authority, which regulates financial firms providing services to consumers, announced plans to impose stricter rules on payday lenders, proposing that all borrowers should have an affordability check before being given a loan.

Addressing the recent meeting, Mrs Rothwell said: “We have had cases where people have got eight or nine pay day loans running at once, with no way to pay them back.

“People have described them as the quickest way to get into unimaginable debt and it is a growing problem.”

The council and the CAB are now working alongside credit unions and plans to hold information sessions at Newbury library and other venues in an attempt to raise awareness of the issue.

It will also attend public meetings to inform people of their rights when dealing with lenders.

Some of the problems of payday loans raised at the meeting were a lack of understanding on how quickly interest can escalate, affordability, confusion over the right to cancel, fraud awareness and harassment.

Mr Murphy said: “Payday loans are legal but the way in which some of them operate is questionable.

“Our job is to enforce so we will be looking into any cases of extreme harassment, wrongdoing or fraud and we will take it forward.”

According to national CAB research, 160 complaints were made to the Financial Ombudsman between April and June this year about payday loans, with 72 per cent upheld in favour of the consumer.

The same findings revealed that of the 665 payday loan cases reported to its consumer services between January 1 and June 30 this year, at least 76 per cent could have grounds for an official complaint.

Chief executive of the FCA, Martin Wheatley, said: “Today I’m putting payday lenders on notice: tougher regulation is coming. The clock is ticking.”

A short film called Payday Loans: Know Your Rights, has also been launched and can be viewed at www.adviceguide.org.uk

Don’t forget to read the Newbury Weekly News — Berkshire’s largest–selling local newspaper — out each Thursday morning.

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West Berkshire Council – Know your rights on Payday Loans


Know your rights on Payday Loans

With the new Financial Conduct Authority (FCA) announcing a forthcoming crackdown on payday loan companies, local advice charity, West Berkshire Citizens Advice Bureau (CAB) and West Berkshire Council’s Trading Standards Service, have joined forces in a campaign to raise awareness amongst consumers of how payday loans work and of their rights when things go wrong.

Issued on: 09 October 2013

The consumer campaign, which was launched at the West Berkshire CAB AGM on the 1st October, will run until January 2014, with events taking place at a range of venues, including libraries, children’s centres and colleges where CAB Advisers and Trading Standards Officers will be on hand to provide information and advice. A one minute film, ‘Payday loans: Know your rights’ will also be shown at a range of community venues and is also available on the CAB web-site: www.adviceguide.org.uk.

Jan Rothwell, CEO of West Berkshire Citizens Advice Bureau said, “Payday loans may be viable options for one-off, short-term borrowing for some consumers. Sadly for many of our clients, once they miss payday loan payments, with interest rates of over 4000%, the loans quickly spiral out of control. As one of our clients told us, ‘taking out a payday loan is the quickest way of getting into unimaginable debt’. Another client had five payday loans and came to us for advice on realising that repayments would swallow up 82% of his salary. Working in partnership with Trading Standards is an ideal way to pool our expertise and to help residents by bringing their enforcement powers to bear on any companies who may be acting illegally.”

Dominic Boeck, West Berkshire’s Executive Member for Trading Standards, said, “We are pleased to be working with the Citizens Advice Bureau on this growing issue which is increasingly affecting the lives of many people. Trading Standards deliver their service at community level and this partnership will combine their enforcement role perfectly with community engagement. We would urge people to report any concerns they have with the way pay day loan companies, or indeed any credit providers, are operating. If a payday lending company is improperly lending or harassing consumers, we will investigate thoroughly to ascertain whether any legal controls have been breached.”

For free, confidential debt advice, contact West Berkshire CAB on

08444 7799 80 or visit www.adviceguide.org.uk

To report any concerns about breaches of the law contact the Trading Standards helpline (01635) 519930 or email tsadvice@westberks.gov.uk


[…]

Bournemouth student advisor warns against payday loans – BUzz …

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The Citizens Advice Bureau (CAB) has today warned that early results from their independent report suggested that payday loan lenders are failing to stick to the rules.

Bournemouth University student union (SUBU) advice centre has also revealed that they have seen a rise in the number of students taking out payday loans with high interest and being unable to meet the high repayment plans.

Photo Credit: swanksalot via Compfight cc

CAB suggested that some payday companies are breaching their licensing laws by lending to under 18s, mentally ill clients and even people who are drunk at the time of application.

Only 18% of some 780 cases surveyed between november 2012 and may 2013 were dealt with sympathetically and positively whilst just 16% were offered reasonable repayment plans.

Director of the SUBU advice centre at Bournemouth University, David Stock, realises that instant loans are appealing to students in debt but discourages people from taking out high interest loans unless you are strict about paying them back. He advises to exhaust all other options first before taking out a payday loan and to seek advice if you fall behind on payments.

Listen below to hear what Bournemouth residents had to say about payday loans and how free advice services such as SUBU and CAB can help anyone with money worries.

[…]

Ipswich: Payday loans used to buy essentials can result in spiralling …

Ipswich: Payday loans used to buy essentials can result in spiralling debt

Friday, February 1, 2013
3:56 PM

BOSSES at Ipswich and District Citizens Advice Bureau (CAB) say they have seen a ten-fold increase in the number of clients receiving help with debt having taken out payday loans.

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Marketed as short-term bridging loans, they have attracted criticism because of their very high interest rates.

Nelleke van Helfteren, deputy manager at Ipswich and District CAB, said: “At a time when wages and benefits are not going up we are seeing our clients taking desperate measures to ensure they have enough cash to eat and heat their homes.

“These payday loans are being used to buy food and most clients are unable to find the funds to repay the loans at the end of the term which leads to spiralling debt.

“We have also seen an increase in clients who are coming to us, not knowing where to go for help as they are having to juggle between making sure they have paid their rent, food, utilities and transport costs.”

Ms van Helfteren predicts the situation will worsen for many when changes to the welfare system take effect.

“What really concerns us here at Ipswich and District CAB is that the upcoming changes to benefits and in work tax credits have not started to bite yet and things will only get more difficult for our already vulnerable clients and families.”

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[…]

Apply for Payday Loans Online 24/7, 5 min Application & Quick …

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**Not all loan applications or extension requests are approved. Due to state and verification requirements, not all applicants for online loans may be eligible for instant approval by CashNetUSA or third-party lenders.

***Some customers applying for payday loans or installment loans may be required to submit additional documentation due to state law and qualification criteria.

†CashNetUSA or third-party lender does not perform traditional credit checks as part of its credit transaction approval process, but does verify applicant information via national databases including, but not limited to, Tele-Track and Clarity. If you have defaulted on past transactions, you may be declined for a cash advance from CashNetUSA.

‡Maximum funded amount for payday loans or installment loans depends on qualification criteria and state law. See Rates and Terms for details.

++Please see Rates and Terms to check the availability of online loans and extensions in your state. CashNetUSA is not a lender in all states. In some states, CashNetUSA will (i) act as a Credit Service Organization to arrange a loan between you and a third-party lender, or (ii) in Texas, act as a Credit Access Business between you and a third-party lender.

+++If you are a Payday loan, CSO, or CAB customer, discount will be applied to the initial loan fee, CSO fee, or CAB fee respectively. If you are an Installment loan customer, rebate will be offered on the first two installment payments of your next loan. Only valid upon full repayment of the loan with a minimum of two full installment payments made. Rebate paid via bank account ACH credit following full repayment of the loan. Discounts are not available in all states. Please see your state’s Rates and Terms for additional details.

1Must be 21 years of age for Mississippi residence and 19 years of age for Alabama and Delaware residence.

Customer Notice: Payday advances should be used for short-term financial needs only, not as a long-term financial solution. Customers with credit difficulties should seek credit counseling.

© 2012 CNU Online Holdings, LLC. All Rights Reserved.

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