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
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
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
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
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).
3.1 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
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
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
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.
5.1 This initiative has been discussed by the Welsh Heads of Trading
Standards Group (WHOTS) and the Directors of Public Protection
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.
7.1 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
7.3 Staffing – No direct staffing implications. Any Wrexham County
Borough Council staff involvement will be managed as described in
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.
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