The LGA is urging people struggling to make ends meet to avoid loan sharks, and is calling for tougher sentences for illegal money lenders charging exorbitant interest rates on loans.
Despite significant pressures on their budgets, councils are determined to help people with debt worries. Councils have supported several recent prosecutions of loan sharks who target the most vulnerable and typically use intimidation to enforce repayments. These cases include illegal loans with interest rates of 100 per cent, although criminals charging interest rates of 1,000 per cent have also been previously convicted.
Anyone experiencing money problems should contact local debt charities, which work closely with councils to provide free impartial advice and develop better financial support for households with debt and repayment worries.
Small loans from community development financial institutions and the credit union sector also offer safer and more affordable ways to borrow money.
Cllr Morris Bright, Vice-Chairman of the LGA’s Safer and Stronger Communities Board, said: “We know many people are struggling to make ends meet, but loan sharks should never be used.
“Illegal money lenders are bullies who charge astronomical interest rates and subject their victims to intimidation and violence when they often struggle to repay their loans at rates they simply can’t afford.
“There are much better, safer and cheaper ways people can manage their money.”
He added: “With councils’ budgets under significant pressure, the Government needs to ensure local authorities have the necessary funding to support those in need.”