Desperation leads 3.3m Brits to turn to loan sharks!

Did you ever watch channel 4 play....I am Kirsty ...with Samantha Morton.... a good few years ago now....it was a painful watch...but showed how desperate some families are when they turn to loan sharks...and some don't even realise that these people are loan sharks before its too late

Once they have had one loan, they can’t afford to escape the cycle.

It's terrible.

Hope this helps someone.

www.gov.uk/report-loan-shark#:~:text=Loan%20sharks%20are%20illegal%20moneylenders,and%20report%20loan%20sharks%20anonymously.

Sadly, I think some vulnerable people will be taken advantage of and not told about the real interest rate.

I’m sure that even if some were told the real interest rate they wouldn’t understand the ramifications - and once the shark has reeled them in they have little chance of escape with nobody who is more clued up looking out for them.

Heartbreaking

Twas ever thus.
Payday loans are a temporary help for many people, loan sharks have been around for a long time.

Oreo

Twas ever thus.
Payday loans are a temporary help for many people, loan sharks have been around for a long time.

This is, presumably, a variation on 'The poor are always with us'? Meaning that we shrug our shoulders and accept an economic system which ensures that there will always be people living below the poverty line who can be preyed on and exploited?

It would be so good if 'poverty' at least meant that the 'poor' could earn enough, or be supported to the extent that they could feed, clothe and heat themselves and their families without being prey to loan sharks and their ilk. There would be nothing wrong with 'poverty' being a relative, rather than an absolute, state.

We have a single woman at work who is always cadging a loan to pay the rent, works full time has a private rented flat I think, no chance of social housing so it’s tough.

It’s a modern day term for usury - although not that modern as it dates from the 1800s. Strictly speaking, usury meant charging any interest at all but the prohibition on interest was finally abolished for good in 1571. People came to regard usury as the charging of excessive interest rather than interest itself. Usury restrictions (what could be charged) were scrapped altogether in Britain in 1854.

Loan-sharking and predatory lending e.g. payday loans are two different things; the difference is whether the lender stays within the law to collect what is owed.

I am not suggesting for one minute that loan-sharking with menaces isn’t a vile practice but I am dubious of the headline numbers.

The IPSOS UK data that is driving this news story surveyed only 1,859 adults aged 18-75. Seven percent said, that to the best of their knowledge, they or someone in their household had borrowed from an unlicensed or unauthorised informal money lender.

IPSOS made its own disclaimer: In view of the online panel methodology, scaling up to population estimates isn’t strictly appropriate. However, if results were viewed as fully representative of the GB 18-75 population, this 7% would equate to c. 3.3m people stating they or someone in their household have borrowed from such a lender (based on the ONS 2021 mid-year estimate of 46.6m for GB population aged 18-75).

fair4allfinance.org.uk/as-one-door-closes-illegal-money-lending/

The IPSOS report tells us that its research is informed by a further report by Fair4All Finance and We Fight Fraud which reads:

Between June and December 2022, at the emergence of the current cost of living crisis in the UK, 287 people who have borrowed from illegal lenders told We Fight Fraud’s researchers about their experiences. The research team also interviewed eight illegal lenders to gain insight into who they lend to, why they lend money this way, and any recent changes they have observed within the illegal lending market. Participants were drawn from four different case study areas across Great Britain - South London, Preston, Port Talbot and Glasgow. They are not a representative sample. They have specific experience of borrowing money from people that they knew to be, or now believe to be, operating illegally.

The survey fund that those who borrow from illegal lenders are slightly more likely to be male (60%), white British (94%), aged between 30 to 49 years old (55%), with no financial dependants (52%).

fair4allfinance.org.uk/wp-content/uploads/2023/06/As-one-door-closes_WFF_V3_FINAL1.pdf

I am wary of shock headlines based on a small sample where the surveyors admit that the scaling isn’t strictly appropriate plus an even smaller sample from elsewhere where the surveyors say the people questioned are not a representative sample.

Behind every attention-grabbing headline …

Interesting TinSoldier thanks for the info.

Germanshepherdsmum

Behind every attention-grabbing headline …

So ignore it?

No, investigate further.

The sad irony, of course, is that those of us who don't have to resort to non-traditional loan sources do have access to better interest rates or purchase opportunities. If, for example, my washing machine died this weekend, I would do a quick bit of online research, find what I want, then either get it delivered or load it into the back of the car. Best price obtained, paid on credit card, no interest. If I wasn't in this position, I would likely have to buy one from a mail order catalogue, or similar, and not only would it cost more, I would also pay interest. Having bought said item, there would be no impact on my food, rent, energy bills either. That is the difference.

The UK has a very high level of income inequality compared to other developed countries.

The majority of households in the UK have disposable incomes below the mean income (£32,300 as of 2022). This includes wages and cash benefits, and is after direct taxes like income tax and council tax, but not indirect taxes like VAT. The median income was rising by 2.2% on average for the last five years before the pandemic. However, in 2022, incomes for the poorest 14 million people fell by 7.5%, whilst incomes for the richest fifth saw a 7.8% increase.

In 2022, households in the bottom 20% of the population had on average an equivalised disposable income of £13,218, whilst the top 20% had £83,687. As can be seen from the graph below when original incomes are compared, the difference is even more striking: the richest fifth had an income more than 12 times the amount earned by the poorest fifth.

equalitytrust.org.uk/scale-economic-inequality-uk

What is wrong with our society?

Where do you want me to start?

HousePlantQueen

The sad irony, of course, is that those of us who don't have to resort to non-traditional loan sources do have access to better interest rates or purchase opportunities. If, for example, my washing machine died this weekend, I would do a quick bit of online research, find what I want, then either get it delivered or load it into the back of the car. Best price obtained, paid on credit card, no interest. If I wasn't in this position, I would likely have to buy one from a mail order catalogue, or similar, and not only would it cost more, I would also pay interest. Having bought said item, there would be no impact on my food, rent, energy bills either. That is the difference.

I agree, this correct. Poorer people pay disproportionately more for anything that they need to borrow for in order to afford.

varian

The UK has a very high level of income inequality compared to other developed countries.

The majority of households in the UK have disposable incomes below the mean income (£32,300 as of 2022). This includes wages and cash benefits, and is after direct taxes like income tax and council tax, but not indirect taxes like VAT. The median income was rising by 2.2% on average for the last five years before the pandemic. However, in 2022, incomes for the poorest 14 million people fell by 7.5%, whilst incomes for the richest fifth saw a 7.8% increase.

In 2022, households in the bottom 20% of the population had on average an equivalised disposable income of £13,218, whilst the top 20% had £83,687. As can be seen from the graph below when original incomes are compared, the difference is even more striking: the richest fifth had an income more than 12 times the amount earned by the poorest fifth.

equalitytrust.org.uk/scale-economic-inequality-uk

An interesting link

y 2023, the richest 50 families in the UK held more wealth than half of the UK population,

Shocking. But I never know what the answer is.
Is trickle down supposed to be a correct concept any more?

The UK has a very high level of income inequality compared to other developed countries

But not wealth inequality?

Global Wealth and Income Inequality

The UK's wealth distribution is roughly average compared to the other OECD countries. The UK has a wealth GINI coefficient of 74.6%.

At which point I became confused.

The Gini coefficent is named after Italian statistician Corrado Gini.

0 represents perfect equality and 1 represents perfect inequality.

A country in which every resident has the same income would have an income Gini coefficient of 0. Conversely, a country in which one resident had all the income, while everyone else had nothing, would have an incomeGini coefficient of 1.

The same analysis can apply to wealth distribution but wealth is more difficult to measure than income. Wealth Gini coefficients tend to be much higher than those for income. The imbalance in the UK is driven by regional differences in property wealth.

In the Equality Trust graphs for 2018-2020 we can see the median wealth for the south east of England is around three times higher than for the north east of England

Hence the Gini coefficent for income is 0.351 while the wealth coefficient is 0.746 which represents an average for the UK as a whole.