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Cabinet by sofiaie

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									Cabinet
Part   1


Item No.     5


Subject      To delegate authority to the Head of Law and Standards and
             the Head of Public Protection and Environmental Services
             the ability to authorise another Local Authority to investigate
             and institute proceedings in relation to matters of trading
             standards legislation.

Purpose      The purpose of the report is, to provide to the Head of Law and Standards and the
             Head of Public Protection and Environmental Services delegated authority to enter
             into an agreement with Cardiff City Council 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, to authorise Cardiff City Council and Officers of the Wales
             Illegal Money Lending Unit, to investigate and institute proceedings against illegal
             money lenders operating in the Newport City Council area.

             The report also seeks similar authorisation for instances where it is necessary for
             Officers of another Local Authority trading standards service, to be authorised under
             trading standards legislation either, to investigate and institute proceedings against
             offenders or assist with an investigation in Newport under the direct control of the
             Trading Standards Section of Newport City Council.

Author       Trading Standards Manager.

Ward         All.

Summary The report explains the legislative framework in which Consumer Credit is enforced
             by Local Authorities, the extent of the problem presented by unlicensed credit
             providers (loan sharks) and reports on the central government funded initiative to
             combat the threat of loan sharks, including a summary of the successful pilot
             schemes. It then requests the ability of named Officers of the Council to be
             provided with the necessary authorisation to authorise Cardiff City Council and its
             Officers within the Wales Illegal Money Lending Unit to investigate and institute
             proceedings in accordance with Part III of the Consumer Credit Act 1974.

             The report further informs on the need, in terms of operational efficiency and
             effectiveness, to allow the same named Officers, the ability to authorise Officers of
             another Local Authority trading standards service under trading standards
             legislation either, to investigate and institute proceedings against offenders or assist
             with an investigation in Newport under the direct control of the Trading Standards
             Section of Newport City Council.
Proposal     To delegate authority to the Head of Law and Standards and the Head of Public
             Protection and Environmental Services delegated authority to enter into an
             agreement with Cardiff City Council 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, to authorise Cardiff City Council and Officers of the Wales
             Illegal Money Lending Unit, to investigate and institute proceedings against illegal
             money lenders operating in the Newport City Council area in accordance with Part
             III of the Consumer Credit Act 1974.

             Further, to delegate authority to the Head of Law and Standards and the Head of
             Public Protection and Environmental Services delegated authority to enter into an
             agreement with another Local Authority 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, to authorise another Local Authority and its Officers, either,
             to investigate and institute proceedings against offenders; or assist with an
             investigation in Newport under the direct control of the Trading Standards Section of
             Newport City Council.

Contact      Matthew Cridland 01633 637405, matthew.cridland@newport.gov.uk.

Action by Head of Public Protection and Environmental Services.

Timetable Immediate.
1      Background –

       Wales Illegal Money Lending Unit

1.1.   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 that
       person with a licence to trade.

1.2.   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.

1.3.   Illegal money lending covers a range of activities, from persons that are actually licensed
       but are acting unlawfully (for example by canvassing off trade premises) to the extreme of a
       person offering cash loans without being licensed at all (Loan Sharks).

1.4.   The Illegal Money Lending Unit’s remit is to investigate illegal money lending activity and
       establish if a problem exists and, if so, bring to justice those persons carrying on this
       activity.

1.5.   The Wales Heads of Trading Standards (WHOTS) submitted a bid to the Treasury and
       DBERR for the Cardiff based project to cover Wales.

1.6.   To date, two pilot schemes have been operating in Birmingham and Glasgow and some of
       the key statistics for the project up to 1 February 2007 include:

       •   Population covered - 5,267,337, incorporating 14 Local Authorities;

       •   Illegal Debt Written off - over £2 million;

       •   Victims helped - over 1,500;

       •   Cash seized to date - £44,170;

       •   Proceeds of Crime Proceedings ongoing for over £1 million;

       •   12 guns taken off the street;

       •   Many of the offenders were also falsely claiming benefits.;

       •   Counterfeit goods to the value of over £100,000 recovered;

       •   Prison sentences totalling over 26 years so far handed down.;

       •   In addition to exceeding the expectations of the Government the project has also
           achieved significant added value, including expert support to other Trading Standards
           authorities in tackling illegal money lenders in their area. Developing partnership
           working with the Police, the Department of Work and Pensions, H M Revenue and
           Customs as well as other key Partners has facilitated a coordinated approach to
           tackling crime.
1.7.    The evidence so far indicates that illegal moneylenders are widespread and prevalent.
        They operate in areas that have a high proportion of rented accommodation and target the
        most vulnerable members of society. High rise flats are common premises targeted by
        ‘loan sharks’ as legitimate lenders do not lend to people residing in this type of
        accommodation in Wales due to the health and safety risks for their collectors.

1.8.    Evidence suggests illegal moneylenders vary from those who lend £10 over a few days and
        demand £12 on repayment, to those who provide substantial loans to those looking to set
        up businesses. Interest rates range from 100% up to 117,000% APR in some instances.

1.9.    Information gathered so far suggests that illegal money lending is being operated across all
        sectors of the community. The majority of people using moneylenders are in receipt of
        income support or benefits and are introduced through word of mouth. However, evidence
        also suggests that money lenders operate within the wider community and the pilot has
        identified illegal money lending within the business community.           In many of the
        investigations it has been established that the moneylenders resort to intimidation and
        violence in order to secure payment. Other common traits include: adding indiscriminate
        charges, targeting single mothers and introducing payment through sexual favours.

1.10.   Moneylenders often use victims of money lending to assist them with maintaining their
        criminal lifestyle and anonymity, for example illegal money lenders’ vehicles are often
        registered at a clients’ address.

1.11.   There is also anecdotal evidence which suggests that illegal moneylenders 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 moneylenders or removing
        them altogether may therefore help to reduce levels of other criminal activity within a
        community.

1.12.   With regard to enforcement activity the investigation of illegal money lending has proven to
        be very resource intensive. Targets need to be observed and monitored to determine their
        activity, to identify them and if possible establish their address. 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 the life of an investigation, thereby adding to the
        pressure on resources.

1.13.   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 the victims.

1.14.   The Wales Illegal Money Lending Unit will help victims of illegal moneylenders with
        practical help and support through and in conjunction with the services of local Debt Advice
        Teams and the National Debt line. It has been noted that 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.

        Authorisations

1.15.   In order to expand the scheme into Newport the existing Cardiff Team requires proper
        authorisation of the Officers to carry out the investigations and for all the associated legal
        processes and costs thereof to be delegated to Cardiff City Council. The attached protocol
        contains all the required conditions and consents to enable Cardiff City Council Officers to
        undertake investigations and legal procedures
        Options

1.16.   This proposal, if agreed, will supplement Newport Trading Standards resources (at no extra
        cost) and will enable access to a team of highly trained experts from the WIMLU.

1.17.   This area of law enforcement requires specialist expertise, techniques and facilities which
        Newport Trading Standards would not otherwise have access to. Members of the WIMLU
        include Officers with high level training and expertise in surveillance techniques as well as
        security operations.

2       Cross Border Authorisation – Other Trading Standards Legislation

2.1.    There are a number of circumstances where there would be great gains to be made for
        trained and experienced Officers from other Local Authorities, operating within Newport City
        Council, to assist the Council’s Trading Standards Section.

2.2.    Such circumstances include; a situation where a rogue trader is operating across a number
        of authorities and to combat the threat key Officers from across those authorities act as a
        virtual team and take action together; a situation where the necessary enforcement action
        is of a large scale and the Section has insufficient skilled Officers to complete the task
        (typically this is where simultaneous entry warrants are to be executed); and a situation
        where an Officer who is not known to the trader is required to undertake a covert test
        purchase. It is imperative in such circumstances that the Officer undertaking the activity is
        experienced and skilled in the area of law under investigation.

2.3.    Further, later in 2008 there will be a ‘Wales Scambusters’ Team set up for the Wales
        Region to counter cross border rogue trading. The Scambusters Team would operate in a
        similar manner to the WIMLU. There will be a need for the Council to arrange authorisation
        of the Officers of this Team in a very similar way as the Officers of the WIMLU. It would
        assist efficiency if the named Officers had this ability.

2.4.    Where authorisations are produced in this manner a protocol similar to the WIMLU protocol
        will be produced.

3       Options Considered/Available
3.1.1. To delegate authority to the Head of Law and Standards and the Head of Public Protection
       and Environmental Services delegated authority to enter into an agreement with Cardiff City
       Council 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, to authorise Cardiff City Council and
       Officers of the Wales Illegal Money Lending Unit, to investigate and institute proceedings
       against illegal money lenders operating in the Newport City Council area in accordance with
       Part III of the Consumer Credit Act 1974.

3.1,2. Further, to delegate authority to the Head of Law and Standards and the Head of Public
       Protection and Environmental Services delegated authority to enter into an agreement with
       another Local Authority 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, to authorise another
       Local Authority and its Officers, either, to investigate and institute proceedings against
       offenders; or assist with an investigation in Newport under the direct control of the Trading
       Standards Section of Newport City Council.

3.2.1. To delegate authority to the Head of Law and Standards and the Head of Public Protection
       and Environmental Services delegated authority to enter into an agreement with Cardiff City
       Council 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, to authorise Cardiff City Council and
        Officers of the Wales Illegal Money Lending Unit, to investigate and institute proceedings
        against illegal money lenders operating in the Newport City Council area in accordance with
        Part III of the Consumer Credit Act 1974.

3.2.2. To decline to delegate authority in respect to the ability to authorise another Local Authority
       and its Officers, either, to investigate and institute proceedings against offenders; or assist
       with an investigation in Newport under the direct control of the Trading Standards Section
       of Newport City Council.

3.3.1   To decline to delegate such authority for either the WIMLU or for other trading standards
        matters.

4       Preferred choice and reasons
        To adopt option 3.1 as this allows for efficient enforcement in this specific situation for the
        WIMLU and goes further as it will permit similar arrangements to be entered into under
        delegated powers, without delay, if needed in the future for future similar instances.

5       Sustainability and Environmental Issues
        The protection of consumers by prosecuting offenders committing commercial fraud to the
        detriment of the public has an effect of increasing the overall economic sustainability of
        Newport’s Citizens and Businesses.

6       Equalities Impact
        The outcome of such enforcement actions helps to ensure that all Citizens have equal
        access to exercise their rights in Society and not fear being the victim of commercial fraud.

7       Crime Prevention Impact
        Illegal moneylenders invariably target low-income households and the most vulnerable
        members of society. This can mean that their activities have disproportionate implications
        for the more deprived areas and action taken against them therefore supports the policy
        priorities associated with crime and disorder and protecting the more vulnerable members
        of the community.

        To extend the ability to other instances requiring cross border enforcement, whether it is
        between two neighbouring trading standards services or with the future Wales Scambusters
        Team, increases the efficiency of the Service and enhances its ability to impact on
        criminality.

8       Comments of Head of Law and Standards - Monitoring Officer
        The proposals are within the Council's legal powers and are supported. As the proposal
        involves an amendment to officers' delegated powers, Council will need to approve the
        decision.

9       Comments of Head of Finance - Chief Financial Officer
        I have no objection to the proposed action. There is no direct additional cost to the Council.

10      Comments of Cabinet Member for Community Safety and Sustainability
        I support the proposed action.
11   Background Papers

     •   Appendix 1 - The Draft Protocol between Newport City Council and Cardiff City
         Council for the authorisation of the Wales Illegal Money Lending Unit is set out
         below.
APPENDIX 1

DEPARTMENT FOR BUSINESS ENTERPRISE & REGULATORY REFORM
ILLEGAL MONEY LENDING PROJECT
Protocol for illegal money lending team investigations


Interpretation

For the purposes of this Protocol –

“CCC” means Cardiff County Council

“NCC” means Newport City Council

“NTS” means Newport City Council Trading Standards

“WIMLU” means the Wales Illegal Money Lending Unit
“Delegated Power” means the discharge of the function of the Enforcement of Part III of the
Consumer Credit Act 1974 granted to CCC by NTS in pursuance of section 101 of the Local
Government Act 1972, Regulation 7 of the Local Authorities (Executive Arrangements)
(Arrangements for Discharge of Functions) (Wales) Regulations 2002, section 13(7) of the Local
Government Act 2000 and any other legislation enabling this discharge

“Commencement Date” means the date the Delegated Power is granted

“Term” means from the date of signing of this protocol to 31st March 2009

“Cardiff Trading Standards” means the Trading Standards service of CCC

“Head of NTS” means the Trading Standards Manager of NCC

“Newport Contact Officer (NCO)” means the relevant person appointed by the Head of NTS to
liaise with the WIMLU Team Manager on matters relating to and in connection with the Illegal
Money Lending Project
Commencement date:

Signed
Dave Holland
Head of Trading Standards
Cardiff County Council Trading Standards




Signed
XXXXXXXXXXXXX
XXXXXXXXXXXXX
Newport City Council
1.        Application


1.1   This Protocol applies to the DBERR/HM Treasury funded ‘Illegal Money Lending Project’ and
      covers:


      •     The conduct of investigations and associated working practices for WIMLU Officers when
            conducting investigations or operating in Newport.


      •     The mechanisms whereby NTS is updated on the progress of the project and any
            significant issue relating thereto.


      •     The exchange of intelligence and information between the WIMLU and NTS


      •     The institution and conduct of legal proceedings.


2.    Protocol


2.1   The purpose of this protocol is to facilitate the delegation of powers to Officers employed by
      CCC within WIMLU to enforce the provisions of the Consumer Credit Act 1974 in relation to
      illegal money lending activities known as “loan shark” activities within the area of Newport.
      The protocol encourages the exchange of information and a working partnership approach
      between CCC and NTS in relation to the Consumer Credit Act 1974. However for the
      avoidance of doubt nothing in this Protocol or delegation shall exclude the continuation of
      the exercise of these enforcement powers by NTS.


2.2   This Protocol will come into force on the Commencement Date and terminates at the end of
      the Term or earlier termination in accordance with Clause 2.3


2.3   Notwithstanding the terms and conditions of this Protocol, this Protocol does not prejudice
      the right of NTS to withdraw the Delegated Power at any time during the Term. However
      NTS undertakes not to withdraw the Delegated Power unless it considers there is good
      reason to do so. The Delegated Power is not to be unreasonably withdrawn by NTS.


3.    The WIMLU


3.1   It is recognised that Officers in the WIMLU will need authority to initiate and/or undertake
      investigations and/or the prosecution of potential offences falling within the scope of the
      ‘Illegal Money Lending Project’ where such potential offences fall entirely outside of the CCC
      boundaries. The Delegated Power is deemed to provide such authority in so far as the
      offences fall within the boundaries of NCC.


3.2   The WIMLU comprises staff directly employed by CCC. The WIMLU Team Manager will be
      responsible for the day-to-day operation and supervision of the WIMLU.


3.3   The WIMLU Team Manager will report directly to an Operational Manager within CCC
      Trading Standards


3.4   The WIMLU will provide a progress report to the Head of NTS giving details of
      investigations, prosecutions being pursued or concluded and developments concerning or
      affecting the Illegal Money Lending Project in Newport, (unless there is a significant risk that
      any such disclosure may jeopardise an investigation, such a decision is within the discretion
      of the Operational Manager (Consumer Protection) (CCC)


3.5   It is recognised that after Delegated Power is granted to CCC, all decisions concerning the
      pursuance of relevant investigations, decisions to prosecute and the laying of charges and/or
      information on such relevant matters within Newport, shall be taken by CCC and in
      accordance with the relevant Code for Crown Prosecutors and CCC’s Enforcement Policy.
      However, CCC will consult with the NTS (and take any representations made into
      consideration) before any charges and/or informations are preferred unless it is not
      practicable to do so.


4      Working Arrangements in the Newport City Council Area


4.1    NTS will designate and appoint a Newport Contact Officer (NCO).


4.2    The WIMLU Team Manager will periodically brief the NCO on any intelligence gathered,
       any progress made on investigations and/or prosecutions pending or otherwise, relating to
       or affecting Newport and/or its residents. This includes progress of investigations and
       enquiries being carried out in Newport and any changes made or introduced by the
       Department for BERR concerning the ‘Illegal Money Lending Project’.


4.3    The WIMLU will have regular contact with Gwent Police and other government agencies.
       The WIMLU Team Manager will consult the NCO to identify any local arrangements,
       investigations and protocols before any investigation is commenced in pursuance of the
       ‘Illegal Money Lending Project’. Wherever possible, the WIMLU Team Manager will actively
       involve the NCO and seek to develop close links between those agencies and NTS.
4.4    The WIMLU Team Manager will as soon as reasonably practicable inform the NCO the
       outcome of any concluded prosecution proceedings conducted within Newport.


4.5    CCC will consult (and take any representations into consideration) with NTS before issuing
       any press release concerning any prosecution pursued by CCC pursuant to this Protocol.


4.6    Any contact with local government bodies, other Police forces, credit unions or similar
       organisations that may be locally funded or may involve local sensitivities will be agreed
       with the NCO in advance.


4.7    Where the WIMLU Team Manager and the Head of NTS agree that an Officer or Officers of
       NTS will be actively involved in an investigation, that Officer will be directed to provide the
       WIMLU Team Manager with full assistance. Such agreement will be subject to the WIMLU
       Team Manager being satisfied that the Officer’s or Officers’ participation will not
       compromise any investigation or endanger any member of the WIMLU, supporting staff or
       witnesses, that the Officer has the appropriate training and experience to undertake the
       task; and upon any other terms that the WIMLU Team Manager and the Head of NTS
       consider necessary and/or appropriate.



4.8    Unless there is prior agreement with the WIMLU Team Manager for assistance in an
       investigation, which is accompanied by an official purchase order from CCC, no
       reimbursement will be made for time spent on activities supporting the ‘Illegal Money
       Lending Project’ or expenditure incurred by any NTS Officer.



4.9    The exercise by CCC of these arrangements shall be at no cost to NCC and furthermore
       CCC undertakes to indemnify NCC against any claim made against NCC arising out of the
       exercise by CCC of powers granted to them under these arrangements.



4.10   In the absence of the WIMLU Team Manager, the role, duties, and responsibilities of the
       WIMLU Team Manager shall be discharged and carried out by the WIMLU Deputy Team
       Manager.


5.     Referral of Information/Intelligence to the Project Team


5.1    The WIMLU will rely on NTS and other agencies in Newport to provide information about
       Illegal Money Lender activities.
5.2   NTS will endeavour to provide as much relevant information and intelligence as reasonably
      and practicably possible to the WIMLU concerning any investigation being carried out within
      Newport, having regard to any statutory limitations/restrictions, the time likely to be
      expended, resources available and costs likely to be incurred by NTS in providing the
      same.


5.3   Information and intelligence will be provided by the NCO to the WIMLU Team Manager or a
      person designated by him/her.


5.4   WIMLU will not, as a matter of routine, investigate individual complaints received
      concerning alleged Illegal Money Lender activities. However, such complaints may be used
      by the WIMLU as a source of intelligence.


5.5   WIMLU and NTS agree to process personal data only in accordance with the requirements
      of the Data Protection Act 1998 and to disclose information in accordance with the
      requirements of the Enterprise Act 2002.


6     Conduct and Control of Investigations


6.1   The conduct and control of all investigations undertaken and prosecutions by the WIMLU in
      Newport will be the responsibility of CCC. Investigations will be undertaken in line with the
      CCC’s published Enforcement Policy and subject to the policies and procedures approved
      and adopted by Cardiff Trading Standards and in accordance with all relevant legislation
      and guidance.


6.2   CCC will be responsible for all aspects of the investigations and responsibilities under the
      Criminal Procedure and Investigations Act 1996, Regulation of Investigatory Powers Act
      2000, the Data Protection Act 1998, the Freedom of Information Act 2000 and the
      Enterprise Act 2002.


6.3   CCC will be solely responsible for the Health and Safety of WIMLU Officers and any other
      Officer or person within the direct management of the WIMLU providing support and
      assistance in any investigation undertaken by the WIMLU.


6.4   Where breaches of Part III of the Consumer Credit Act 1974 are identified, action will be
      taken in accordance with the enforcement policy and procedures adopted by Cardiff
      Trading Standards and relevant legislation and guidance.
6.5   When CCC recommends a prosecution under Part III of the Consumer Credit Act 1974, if
      required, NTS will be provided with a copy of the relevant prosecution file, and any other
      material fact about which NTS ought reasonably to be aware. NTS will be invited to
      communicate any comments it considers appropriate and necessary concerning the
      intended prosecution to the Operational Manager (Consumer Protection), the informant for
      CCC. Such comments will be given due attention and consideration by the informant for
      CCC.


7.    Responsibilities and Actions of the Authorities


7.1   CCC shall be liable for the actions and competence of the persons employed within the
      WIMLU and shall ensure that the WIMLU shall comply with all legislative requirements and
      take all reasonable steps to ensure any actions taken are lawful and within the spirit of the
      protocol.


7.2   NTS shall be liable for the actions and competence of persons within its employ and shall
      take all reasonable steps to ensure the competence of those persons in carrying out their
      functions and that they comply with legislative requirements and the spirit of this protocol.


7.3   Information / intelligence provided between CCC and NTS shall be used for the purpose
      intended and shall not be divulged to third parties unless to do so would be lawful and in
      pursuant of an investigation / enquiry subject to this protocol.


7.4   CCC and NTS endorse a partnership approach to the enforcement of the Consumer Credit
      Act 1974. The partners will attempt to promote consistency in enforcement. However, this
      protocol does not attempt to restrict the powers of authorised Officers of the WIMLU or NTS
      from discharging their duties, as appropriate.

								
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