Loan Sharks In The City

Loan Sharks in​ the​ City
Loan sharks are preying on​ the​ poor whilst being protected by the​ government .​
In 1987 BBCs Panorama investigated loan sharking .​
Tony Blair,​ then city spokesman for the​ Labour Party,​ told the​ programme: you​ need some measure of​ control and regulation to​ ensure that the​ unscrupulous arent lending to​ the​ desperate when there is​ no possibility of​ repayment
Sixteen years and two Blair election victories later and there is​ still no sign of​ any such regulation .​
Lending to​ the​ poor at​ incredibly high rates of​ interest goes well beyond the​ seedy and shady local loan shark,​ however .​
Sub-prime lending is​ a​ multi-million-pound mainstream business .​
And not only has Labour failed to​ reign in​ the​ lenders who prey on​ the​ poor,​ the​ party has actually invited them to​ its conference,​ where they pay for the​ platforms government ministers speak from .​
Provident Financial boss Robin Ashton earned 408,​000 last year .​
His firm made 82m in​ profits .​
The Provy makes its money lending to​ the​ poor via door-to-door agents .​
More than a​ million and a​ half Britons borrow from the​ firm .​
Its annual percentage rates (APR) of​ interest work out at​ around 177 per cent .​
The firm claims these high charges are justified by the​ risk it​ takes in​ lending to​ people ignored by the​ high street banks,​ and by the​ cost of​ collecting the​ customers cash on​ the​ doorstep .​
Labours leadership doesnt think Provident Financial is​ preying on​ the​ poor for profit .​
Blairs head of​ policy planning Matthew Taylor praised the​ firm,​ saying: Often we see knee-jerk negative reactions to​ Provident Financial .​
Having seen what it​ actually does,​ such reactions seem misplaced .​
There is​ much for policy makers to​ learn from how it​ provides a​ service that people want .​
Government can often only dream of​ developing the​ kind of​ relationship that Provident Financial has with many of​ its customers .​
Taylor is​ also the​ director of​ New Labour think-tank the​ Institute of​ Public Policy Research (IPPR),​ an​ organisation that is​ partly funded by Provident Financial .​
And the​ government has indeed learned from Provident Financial; emergency grants to​ benefit claimants have long since been replaced with repayable social fund loans .​
But the​ difficulty of​ getting these loans forces many people to​ turn to​ the​ sub-prime lenders .​
The firm also funds two other New Labour think-tanks the​ Social Market Foundation and the​ Foreign Policy Centre (FPC) .​
And this September Gary Titley,​ Labour leader in​ the​ European Parliament,​ spoke at​ an​ FPC meeting paid for by Provident Financial .​
London Scottish Bank is​ another national firm offering doorstep credit to​ the​ poor at​ APRs of​ around 160 per cent .​
This makes London Scottish around 17m a​ year in​ profits .​
Chief executive Roy Reece is​ paid 307,​000 a​ year .​
The firms earnings are boosted by a​ debt collection agency it​ owns called Robinson Way .​
The chairman of​ London Scottish is​ Trevor Furlong,​ who used to​ be chief executive of​ Mersey Docks the​ company at​ the​ centre of​ the​ long and bitter Liverpool dockers strike .​
Some of​ the​ most destructive loans to​ non-status borrowers are those secured on​ peoples homes .​
Abbey National subsidiary First National Bank also lends to​ sub-prime borrowers .​
Many of​ its loans are secondary mortgages; default can result in​ debtors losing their homes .​
Abbey is​ currently selling off First National,​ making chairman Tim Ingram unemployed in​ the​ process .​
But his 1.6m redundancy cheque means he will not have to​ turn to​ doorstep lenders .​
Both London Scottish and First National are members of​ the​ Finance and Leasing Association (FLA),​ the​ lobby group for Britains store-card,​ car-finance and personal-debt businesses .​
The government clearly takes consumer debt seriously: at​ the​ recent Labour Party conference consumer affairs minister Gerry Sutcliffe spoke about the​ issue at​ a​ Social Market Foundation meeting paid for by the​ FLA.

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