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AGENDA ITEM NO. 8 REPORT TO: Executive Board REPORT NO: CHPPO/02/09 DATE: 6 January 2009 LEAD MEMBER: Councillor David A Bithell (Environment and Transport) LEAD OFFICER: Chief Housing and Public Protection Officer CONTACT OFFICER: Peter Brown (Tel 813756) SUBJECT: Agreement with Cardiff City Council for the operation of the Wales Illegal Money Lending Unit in Wrexham WARD: N/A 1. PURPOSE OF THE REPORT 1.1 The purpose of the report is to inform Members of the formation of the Wales Illegal Money Lending Unit and to seek authority for the Chief Housing and Public Protection Officer to enter into an agreement with Cardiff City Council for the operation of the Unit in the Wrexham County Borough area. This agreement will be pursuant to Section 101 of the Local Government Act 1972, Regulation 7 of the Local Authority (Arrangements for Discharge of Functions) (Wales) Regulations 2002 as amended and the Local Government Act 2000, 2. EXECUTIVE SUMMARY 2.1 The primary legislation governing the consumer credit industry is the Consumer Credit Act 1974 and this is enforced, in each Local Authority area, by the Trading Standards Service. The Act is based upon a licensing system and all consumer credit and consumer hire businesses operating in the UK (with certain exemptions) must possess an appropriate licence issued by the Office of Fair Trading (OFT). The OFT must be satisfied that an applicant for a Consumer Credit Licence is a fit and proper person before issuing a licence to trade. 2.2 To operate a consumer credit business without being licensed is a criminal offence and carries a maximum penalty of £5,000 and/or up to two years imprisonment. Further, the OFT can revoke licences where it can be established that the licensee has acted inappropriately. The OFT can issue warnings and add conditions to the licence where necessary. 2.3 Illegal money lending covers a range of activities, from persons that are actually licensed but are acting unlawfully (for example by canvassing away from trade premises) to the extreme of a person offering cash loans without being licensed at all (Loan Sharks). 2.4 Following successful pilot projects in Birmingham and Glasgow, the Treasury and Department for Business Enterprise and Regulatory Reform invited bids for funding of similar projects in other regions of the United Kingdom. The Wales Head of Trading Standards (WHoTS) submitted a successful bid for the Cardiff based project to cover Wales. 2.5 The Wales Illegal Money Lending Unit’s remit is to investigate illegal money lending activity to establish if a problem exists and, if so bring to justice those persons carrying on this activity. 2.6 The Unit has been operational since February 2008. To date, it has operated mainly in South Wales but is now seeking to extend operations across the whole of Wales. Key performance data for the unit includes: 36 cases investigated 13 arrests made and 17 defendants charged Evidence of £900,000 illegal money lending £3,600 cash seized Also, the Unit is establishing links with CABx, Financial Advice Centres, Community Groups and Credit Unions 2.7 The extent of illegal money lending in Wrexham is not known. If the Chief Housing and Public Protection Officer is authorised to enter this agreement, one of the first tasks of the Unit will be to assess the level of illegal activity. 2.8 In order to extend operations into Wrexham, the existing Cardiff Team requires proper authorisation of their Officers to carry out the investigations and for all the associated legal processes and costs thereof to be delegated to Cardiff City Council. 2.9 The attached Protocol for illegal money lending team investigations (Appendix 1) contains all the required conditions and consents to enable Cardiff City Council Officers to undertake investigations and legal proceedings. The Proposed Agreement between Cardiff City Council and Wrexham County Borough Council pursuant to Section 101 of The Local Government Act 1972 is also attached (Appendix 2). In the Protocol (Appendix 1) there is reference to Cardiff City Council’s Trading Standards Enforcement Policy. A copy of this Policy is attached (Appendix 3). 3. RECOMMENDATIONS 3.1 To authorise the Chief Housing and Public Protection Officer to enter an agreement with Cardiff City Council in accordance with the terms contained in Appendix 1. 3.2 The operation of the Unit in Wrexham be reviewed in 12 months. REASONS FOR RECOMMENDATIONS To enable the investigation and prosecution of illegal money lenders by the Wales Illegal Money Lending Unit and reduce this type of crime across the County Borough. Andy Lewis Chief Housing and Public Protection Officer 4. BACKGROUND INFORMATION 4.1 Evidence indicates that illegal money lenders are widespread and prevalent. They operate in areas that have a high proportion of rented accommodation and target the most vulnerable members of society. The majority of people using illegal money lenders are in receipt of income support or benefits and are introduced though word of mouth. Lenders range from those who lend £10 over a few days and demand £12 on repayment, to those who provide substantial longer term loans. Interest rates range from 100%, up to 117,000% APR in some instances. 4.2 Illegal money lenders resort to intimidation and violence in order to secure payment. Other common traits include: targeting single mothers; adding indiscriminate charges and demanding sexual favours instead of payments. They often use victims of money lending to assist them with maintaining their criminal lifestyle and anonymity – for example illegal money lenders’ vehicles may be registered at a client’s address. 4.3 Illegal money lenders have an impact on the wider community in which they operate, with victims resorting to petty crime to enable them to meet payments. Reducing the activities of illegal money lenders or removing them altogether may therefore help to reduce levels of other criminal activity within a community. 4.4 The Birmingham Unit has used injunctions, backed by the power of arrest under the Anti-Social Behaviour Act 2003, to remove lenders from their area of operation. Injunctions are reinforced with an agreement from the local Police to flag the matter on their system and respond immediately if they receive a call from one of their victims. 4.5 The investigation of illegal money lending is a very resource intensive. Suspects need to be observed and monitored over long periods to determine their activities. A significant proportion of targets are also what are termed “life style criminals”, which means that evidence of other illegal activity can surface during the course of an investigation. This may not only involve other agencies but can also extend investigations, thereby adding to the pressure on resources. 4.6 The Unit’s remit includes assisting victims with practical help and support through an in conjunction with the services of local Debt Advice Teams and the National Debt line. Victims often need more than simple money advice and so face-to-face advice is considered the most helpful way forward and is the route normally adopted. The Unit has placed 2 victims under witness protection. 5. CONSULTATION 5.1 This initiative has been discussed by the Welsh Heads of Trading Standards Group (WHOTS) and the Directors of Public Protection Wales (DPPW). 5.2 The initiative has been implemented and is being monitored by a Steering Group set up under WHOTS. 5.3 The Lead Member for Environment and Transport has been consulted. 6. SCRUTINY COMMITTEE COMMENTS 6.1 This report has not been considered by Scrutiny. 7. IMPLICATIONS 7.1 Policy Framework – This matter falls within Community Safety policies and initiatives. These proposals will support the Council’s aims of tackling crime and disorder. 7.2 Budget – Any involvement by Wrexham County Borough Council staff will be managed within the terms of the Protocol and the costs will be met from existing budgets. 7.3 Legal – Investigations will be carried out in accordance with legal requirements, including Police and Criminal Evidence Act 1984, Criminal Procedures and Investigations Act 1996 and The Regulations of Investigatory Powers Act 2000. Under the terms of the Agreement, Wrexham County Borough Council will be indemnified by Cardiff City Council for any fees, expenses or liabilities arising from investigations and prosecutions. 7.3 Staffing – No direct staffing implications. Any Wrexham County Borough Council staff involvement will be managed as described in 7.2, above. 7.4 Equalities/Diversity – These enforcement actions will help to ensure that all citizens have equal access to exercise their rights in society and will not fear being the victim of fraud and oppression. A Stage 1 Impact Assessment has been carried out and identified the importance of communicating these issues to the public. This is currently being addressed with partner organisations to ensure appropriate measures are in place. BACKGROUND PAPERS LOCATION WEBSITE INFO None.
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