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Illegal money lenders – or, loan sharks – have a deservedly negative reputation. They frequently target those already struggling with financial problems and make it even more difficult to get back to a positive place. Loan sharks are unregulated and The post The Success of the Illegal Money Lending Team appeared first on Solution...
Illegal money lenders – or, loan sharks – have a deservedly negative reputation. They frequently target those already struggling with financial problems and make it even more difficult to get back to a positive place. Loan sharks are unregulated and often resort to illegal methods when it comes to forcing consumers to make repayments. As a result of the sinister nature of this industry, the England Illegal Money Lending Team (IMLT) was established in 2004 to provide support to borrowers and to investigate and prosecute loan sharks. Although it initially began life as a pilot scheme in Birmingham, today the IMLT works across the country and has had a great deal of success.
Illegal money lenders (loan sharks) are identifiable in a number of different ways. For example, they might be offering a cash loan that doesn’t come with any paperwork or records. Frequently, the interest rates offered by illegal lenders are high and can change without warning, and there may be no transparency over how much is actually owed. Plus, loan sharks often resort to threats and taking possession of a borrower’s valuables without any right to do so. In 2010, more than 300,000 households in the UK were in debt to illegal money lenders. It was because of the growth in the illegal lending industry that the IMLT was established. So far, the team has provided support for more than 29,000 people and written off over £74.9 million worth of illegal debt.
While loan sharks may initially appear to be offering a solution to financial problems they are not regulated and frequently resort to intimidation and unfair practices. Many people borrow small amounts from an illegal money lender but find that they owe vast sums as interest escalates and random fees and charges are applied. Repayment can be requested at random and violence, or even demanding sexual favours, is not unknown when it comes to forcing repayments. As a result, research has found that victims of loan sharks frequently go without food or heating or skip payments on rent or mortgages just so that they can meet the demands that an illegal money lender has made. Many victims just don’t feel that they can fight back against loan sharks because they are powerlessness. The IMLT was established to support those who have fallen victim to loan sharks and to ensure that illegal money lenders don’t get off scot-free.
Loan sharks are often particularly insistent on consumers making repayments because an illegal debt cannot be enforced by law. However, this has also meant the IMLT has been able to write off a large number of these debts – some £75 million in total – and has been able to provide support for 29,000 people who were struggling as a result. The team has also been able to carry out prosecutions for illegal activity. This has included prosecutions for illegal money lending and also for other offences, including wounding, assault and rape.
Illegal money lenders prey on the most vulnerable people and communities, often starting out friendly and helpful and become increasingly intimidating and violent. It’s an industry that can do a lot of damage despite the fact that the loans aren’t actually legally enforceable. What the IMLT has done is to shine a light on the problems surrounding loan sharks, to provide support to the victims and to start holding people accountable.
If you’ve been approached by a loan shark you can report them here. For your own safety, you should never use an unregulated provider of credit. Make sure that you only use a credit broker or lender who is regulated by the Financial Conduct Authority, as Solution Loans is.
Credit Reference Agencies in the UK have a key role to play in the way that consumers interact with financial institutions. Any time that you make an application to borrow money, for example, the information that an agency has compiled The post How do credit agencies get their data about you? appeared first on Solution...
Credit Reference Agencies in the UK have a key role to play in the way that consumers interact with financial institutions. Any time that you make an application to borrow money, for example, the information that an agency has compiled about your financial history will be checked by the lender. Credit Reference Agencies generate their own credit scores from this information too. Although lenders don’t use these scores they can still be a good indicator of whether you’re likely to be successful when applying for credit. Given the importance of the information that Credit Reference Agencies hold on all of us where exactly do they source it from?
When a lender accesses your credit file they won’t see whatever score that Credit Reference Agency has compiled about you. What they will see is a range of different pieces of data that will be used to build up a picture of your creditworthiness. It’s worth noting that the maximum length of time data is likely to stay on your credit file is six years (e.g. for late payments) – most of it (e.g. other searches carried out) will disappear more quickly. This information includes:
It’s important to understand what kind of data is in your credit file, as well as where this has come from. Most of the time it is up to consumers to regularly check their credit history and to ensure that the information provided by the sources that Credit Reference Agencies use is correct. So, if you want to avoid having a credit problem then it’s key to ensure you know what’s in your credit file – and that you check it on a regular basis.
This 4-minute video explains in more depth how you can go about actively managing your credit file to ensure it reflects reality – this includes how to remove incorrect data held about you that might adversely affect your ability to get credit in the future:
The guarantor loans industry is officially booming. Borrowing with the support of a friend or family member is very appealing, especially to anyone with a low income or without a perfect credit score. As a result, balances on guarantor loans The post The strong growth of guarantor loans continues appeared first on Solution...
The guarantor loans industry is officially booming. Borrowing with the support of a friend or family member is very appealing, especially to anyone with a low income or without a perfect credit score. As a result, balances on guarantor loans have more than doubled since 2016, as the use of this type of loan has increased significantly among consumers. The total borrowed under guarantor loans is now approaching £1 billion. But can the industry continue to expand in this way and is anything – including potential regulation – likely to slow it down?
The concept of guarantor loans is not new but technology and the internet have provided a way to offer access to a wide range of consumers. Borrowers who might otherwise have trouble getting approved for finance can ask a friend, colleague or family member to stand as a guarantor for their borrowing. Lenders are more likely to approve applications that are backed up by a guarantor who has a strong credit rating and/or is a homeowner. If the original borrower is not able to make payments on the loan the guarantor will step in and do this instead. The benefit of guarantor loans is that they can make lending accessible to those who otherwise would not be able to borrow – a guarantor is effectively a form of additional security for the lender.
There has been a steady increase in the number of consumers taking out guarantor loans, as well as the number of lenders in the sector. The market for online loans has expanded considerably with a range of new guarantor lenders popping up online. Some of the biggest players in the guarantor loans market are currently enjoying a lot of success – for example Amigo Loans has reported an increase of 17% in customers year on year and Non Standard Finance recently revealed a rise of more than 50% in its guarantor lending arm. However, this year there have also been some signs that the market is not as strong as it appears to be. For example, in August Amigo Loans share price took a 53.6% dip after the lender announced a rise in first-quarter impairments and costs and issued a warning that its ongoing growth could be relatively slow.
So far, the Financial Conduct Authority (FCA) has paid little attention to the guarantor loans industry but this year that also started to shift. Given the huge changes that have been forced onto payday loans to protect consumers in recent years, it was perhaps no surprise that the same would follow for other forms of higher-cost credit. The regulator has expressed concerns over the high-interest rates that accompany guarantor loans – particularly as the additional security of a guarantor is, in theory, there to provide the reassurance lenders need to charge relatively normal rates. Other potential problems include:
The guarantor loans industry in the UK has been experiencing a period of incredibly positive growth in recent years. Lenders have seen profits soar as the number of consumers using the loans rises considerably. However, there are some indications now that the market might be stalling. Issues are beginning to arise with the way that these loans are being handled, with the number of guarantors who are forced to take over the repayments and with the affordability of this type of lending. Whether as a result of new regulation, or a drop in consumer confidence, change could be necessary for lenders in this industry soon.
On 14th October 1969, the 50p coin entered into circulation in the UK. At the time Britain was a pretty different place to be. Europe was on the agenda then too but this time it was in the context of The post The 50p is 50 years old. How have our costs changed? appeared first on Solution...
On 14th October 1969, the 50p coin entered into circulation in the UK. At the time Britain was a pretty different place to be. Europe was on the agenda then too but this time it was in the context of negotiations to get into it – rather than out of it. The Internet was a distant dream at the time and online shopping, bitcoin and social media were simply not yet on the cards. When the 50p came into circulation it was larger and heavier than it is now – and it was also worth about the equivalent of £8 in today’s terms. Given the massive rate of inflation since 1969 (1,554% – i.e. general prices have risen 16x) and shifts that have taken place in the cost of living a lot has changed.
Perhaps the most significant change in household living expenses since the 50p was introduced is how much it now costs to buy a home. The average home would have cost the average consumer £4,640 in 1969. That was the equivalent of £55,000 in 2007 when adjusted for inflation. By 2007 the average cost of buying had risen to four times that amount – £223,405. Rent or mortgage payments now consume a higher proportion of monthly incomes than they ever have before. Despite several recessions since 1969 – and a burst housing bubble – house prices have remained historically high.
Advances in technology and farming practices have brought down the cost of food. For example, chicken is now three times cheaper than households would have paid when the 50p piece was introduced. Products such as bread, eggs, sugar and coffee are roughly half the price. The average price of a grocery shop in 1969 was £1.10 (£17.24 in 2019 money), which is 27% higher than the cost today. However, with that has come other less pleasant side effects – for example, mass farming practices that have made cheap meat and dairy possible are also enormously damaging to the environment, often cruel to animals and potentially not actually that healthy for consumers given the use of antibiotics and industrial feeds.
Clothing is another household cost that tends to take less from our monthly budgets than it once did. Although it’s difficult to compare like for like, as there isn’t that much data, figures provided by The Guardian newspaper show that its fashion section featured a black-and-white wool coat at £34 in Debenhams in 1969 – that would be £562 in current money. Today, Debenhams’ most expensive coat is £349. However, again there are consequences to the access we have to cheaper clothes – the fashion industry is now the second most polluting in the world behind oil.
For example, if you wanted to stay in and watch TV back in 1969 you’d pay £1 a week to rent a TV set (£865 a year in today’s money) but you’d only get three channels and two of them would be in black and white. However, if you were planning to go out you might find yourself paying a lot less than today. Tickets to the theatre, for example, are a lot more expensive in 2019 – back in 1969 you’d have paid the equivalent of £4 – £20 to see Fiddler on the Roof but today the same tickets are £20 to £145. The price of a night in the pub has risen too – in fact, beer prices have doubled since 1969. Our tastes have changed significantly as well. There were no Pornstar Martinis back in 1969, instead, the entire world (including the Queen) was drinking Mateus Rosé.
The average price of a car back in 1969 was £1,060 (or £16,642 in 2019 money) – that’s around 21% lower than the average cost of a car today, but today’s cars are safer, better built, better equipped and probably more reliable. It’s worth noting that car finance didn’t really exist 50 years ago when the 50p was first introduced so if you didn’t have the cash to make the full payment on a motor then you’d be stuck without anything to drive.
Although many of our household living costs are significantly higher today than 50 years ago, salaries are too. In fact, the average salary was 45% lower in 1969 – around £15,109 in today’s money. There have also been improvements in the gender pay gap since then – real pay for the average male employee has risen by around a third since the 50p was introduced but has doubled for women. Any gender pay gap is too much of a gender pay gap but at least women are slightly better off than 50 years back.
The cost of living has changed enormously since the 50p was released into the UK economy back in 1969. Much of the economic and household change has been positive but some has had unintended consequences that are still yet to be resolved.
The post The 50p is 50 years old. How have our costs changed? appeared first on Solution Loans.
Transforming your credit file can be life-changing. Not only are you likely to get greater peace of mind from knowing that what lenders see is positive but you’ll pay less for borrowing too. Even if you’ve had issues in the The post How to Clean up your Credit File appeared first on Solution...
Transforming your credit file can be life-changing. Not only are you likely to get greater peace of mind from knowing that what lenders see is positive but you’ll pay less for borrowing too. Even if you’ve had issues in the past that doesn’t need to prevent you from creating a brighter credit future. So, how do you do it?
Everyone in the UK has a credit file, which is essentially a collection of the most recent information about your current financial situation in terms of what lenders want to see. So, this could include your existing borrowings and will also show what you’ve borrowed in the past – including any issues such as defaults. You can access your credit file via one of the main credit rating agencies: Equifax, Experian, TransUnion.
Every hard search made by a lender when you submit a credit application will appear on your credit file. If you’re consistently being rejected for credit cards or loans then it makes sense to stop and take a break for at least six months before making any further applications. An alternative is to request any search a lender does is a ‘quotation search,’ as opposed to a full search of your file. This will identify whether you’re likely to be accepted, as well as the interest rate you’d be offered, but won’t leave a permanent mark.
Ideally, your current balances will be at 50% or less of the total amount you could potentially borrow. However, you can see an improvement in your credit profile even by reducing outstanding amounts a little. Spend a few months making repayments – and avoid re-spending what you pay off – and your credit file will be considerably improved.
It’s worth taking the time to go through your credit file to ensure that everything in there makes sense. If there are errors – for example, an incorrectly recorded default – they could negatively impact your ability to get approved for credit. It’s also important to ensure that you’re on the electoral roll, as this is the information that lenders will use to confirm your address details.
Financial associations can arise between you and anyone you’ve had a shared financial past with – it doesn’t have to be an ex-partner. For example, if you had a joint account with your previous housemates for bills when you lived together this could have created a financial association. If their credit is bad then this could affect your own credit file unless you break the link. You can do this by contacting a credit rating agency and requesting that they dissolve the connection between the two credit files.
This part of the process is not rocket science:
If you’re a tenant you can sign up to the Rental Exchange initiative. This effectively means that you make your rent payments to a third party called Credit Ladder. These are passed on to the landlord and Credit Ladder will report to Experian whether the payments were made on time. Those that are can contribute to improving your credit file.
These could be mobile phone accounts, old credit cards or store cards – if you’re not using them then it’s not a good idea to leave them open. You might be tempted to go on a spending spree if you have a bad day (if you’re that type of spender). You could also be leaving yourself vulnerable to fraud if you have open credit accounts that you’re not really monitoring. You may face resistance from a lender or services provider when trying to close accounts with them so you may need to be firm if you want to follow the closure of the account through.
If you want to apply for loans, credit cards, mortgages or guarantor loans, making improvements to your credit file could improve your chances of being approved, as well as enabling you to access better rates.
Update: Since this was written it has been announced that the Albermarle & Bond “pledge books” have been bought by rival H&T for £8m. The credit industry is a fast-changing place these days and there have been some high profile closures The post Albermarle & Bond closes its doors. What next? appeared first on Solution...
Update: Since this was written it has been announced that the Albermarle & Bond “pledge books” have been bought by rival H&T for £8m.
The credit industry is a fast-changing place these days and there have been some high profile closures and exits from the market in recent years. In September 2019, pawnbroker Albemarle & Bond became one of the latest names to be cast under a shadow as it abruptly ceased trading and shut all of its stores. Customers were unable to access their pawned items and were fearful that they would never be able to recover them.
Speedloan Finance, which owns Albemarle & Bond, stated that the 116 stores in the group have been closed because the group has run up significant losses. At the end of 2018, Speedloan Finance reported a drop in revenue from £38m to £34m and an increase in pre-tax losses from £1.9m to £3.3m. The ultimate owner of all these businesses is Daikokuya Holding, a Japanese company with a pawnbroking business that is listed on the Japanese Stock Exchange. This is not the first time that Albemarle & Bond has come close to closing – it almost went into administration in 2014 but was saved at the last minute.
For anyone who has a pawnbroking agreement with Albemarle & Bond, the company has stated that they will still be expected to adhere to the terms of the agreement or will risk the items pawned being sold on when the agreement comes to an end. This is effectively what would happen anyway under a pawnbroking agreement and is not affected by the organisation’s own financial troubles. However, many customers who were hoping to redeem their items once the money was repaid are now concerned about how they will access them now that the high street stores are closed and all the items seem to have disappeared. There are fears over whether personal items are safe and also how they can be retrieved. The contact number provided by the business is either overwhelmed or simply not working and many customers have stated that they are “terrified” about where their items could end up. Recent newspaper reports have featured customers quoted as having secretly pawned items that were gifts from friends or close loved ones as a result of financial hardship who now face having to own up to what they’ve done if they aren’t able to retrieve the items.
According to Speedloan Finance all options are being explored in terms of trying to find a way to enable Albemarle & Bond to have a future in the lending industry. This could include finding a buyer for the business and making cuts. Speedloan has said that it is consulting with Albemarle & Bond employees and that many have been offered voluntary redundancy. There has been plenty of criticism of the way that the crisis has been handled by the business, including from the National Pawnbrokers Association. It released a statement indicating that the operational decisions of the business were its own concern but the way that it was handling customers was not good enough in terms of the standards that are expected from companies in the industry. It said,
“In particular, we are most unhappy with the fact that customers cannot get through to the helpline. We have demanded that the management of the company resolve this as a matter of urgency.”
One of the biggest concerns with the closure of these stores is the reduction in access to credit that it will present to a wide range of people in the affected areas. Pawnbrokers allow borrowers to provide something valuable – such as a watch or a piece of jewellery – as security for a loan. That security is then returned to the customer once the loan has been repaid. Many of those who use pawnbroking don’t have access to other forms of credit and could struggle to get approved for a loan with a high street bank. They may not be able to use online lending or simply prefer to deal with a local high street store. The issue now is what happens to those people who no longer have access to borrowing as a result of these closures.
Albemarle & Bond has been pulled back from the brink in the past and could well live to fight another day. However, for its customers, the lack of communication and worries over the future of their valuables remain a worrying concern.
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