Chamber and committees

I refer the member to the answer to question S4W-13774 on 11 April 2013. All answers to written parliamentary questions are available on the Parliament’s website, the search facility for which can be found at:

http://www.scottish.parliament.uk/parliamentarybusiness/28877.aspx.

I refer the member to the answer to question S4W-13774 on 11 April 2013. All answers to written parliamentary questions are available on the Parliament’s website, the search facility for which can be found at: http://www.scottish.parliament.uk/parliamentarybusiness/28877.aspx.

I refer the member to the answer to question S4W-13774 on 11 April 2013. All answers to written parliamentary questions are available on the Parliament’s website, the search facility for which can be found at:

http://www.scottish.parliament.uk/parliamentarybusiness/28877.aspx.

I refer the member to the answer to question S4W-13774 on 11 April 2013. All answers to written parliamentary questions are available on the Parliament’s website, the search facility for which can be found at:

http://www.scottish.parliament.uk/parliamentarybusiness/28877.aspx.

I refer the member to the answer to question S4W-13774 on 11 April 2013. All answers to written parliamentary questions are available on the Parliament’s website, the search facility for which can be found at:

http://www.scottish.parliament.uk/parliamentarybusiness/28877.aspx.

Illegal money lending is a blight on our communities, in particular for those areas that are most deprived and for individuals who are vulnerable. The actions of illegal lenders can lead to fear and distress as well as significant financial loss for those least able to afford it.

It is an offence under the Consumer Credit Act 1974 to offer consumer credit without an appropriate licence. Consumer credit legislation is a reserved matter which is the responsibility of the UK Government. The UK Office of Fair Trading is currently responsible for regulating the licensing of credit providers. The UK Department of Business Innovation and Skills provides direct funding for national advice and support services for the victims of illegal money lending, including the Scottish Illegal Money Lending Unit. The Scottish Government does not provide direct funding to the Unit, which was established by UK Ministers.

In 2010, the UK Department of Business Innovation and Skills published “Interim Evaluation of National Illegal Money Lending Projects”, which included an assessment of illegal money lending across the UK, including Scotland, types of lenders and users and key drivers which lead people to use illegal lenders. It is estimated by the Scottish Illegal Money Lending Unit that there are over 200 illegal money lenders operating across Scotland.

The Scottish Government’s criminal proceedings database shows that since 2002-03, a total of 28 people have been proceeded against where the main charge was under sections 39 and 46 of the Consumer Credit Act 1974. Offences under this legislation relate to, amongst others, offences of illegal money lending. There have been 15 successful prosecutions under the relevant legislation since 2002-03. Information on the reports and specific charges laid is not held centrally.

Illegal money lending may be associated with other types of criminal activity, including, for example assault and intimidation. Where such crimes are reported and subject to prosecution they will be recorded as part of general criminal prosecution statistics, but may not be identified specifically as being linked with illegal lending. Assets from illegal money lending can also be confiscated under Proceeds of Crime legislation, although figures on this are not recorded separately.

It is acknowledged that there are particular challenges in recording and reporting instances of illegal money lending and that the numbers of reports and charges do not reflect the impact of this crime on our communities. Victims are often reluctant to come forward and to report illegal lenders.

Although Consumer Credit legislation is a reserved matter, a range of organisations in Scotland have a role in responding to illegal money lending and assisting the victims and potential victims.

In March 2013, the Convention of Scottish Local Authorities launched its “Stop Loan Sharks” campaign, encouraging people to report suspected loan sharks. The campaign has the support of the police, Citizens Advice Scotland and the Scottish Illegal Money Lending Unit. The Scottish Government also supports the aims of the campaign.

The Scottish Government provides block grant funding to local authorities for the full range of their responsibilities, including responsibilities relating to consumer protection and advice.

The Scottish Government has also provided funding to maintain a thousand extra police officers overall compared with 2007. Government funding supports the full range of work by the Police, including activity relating to financial crime. From 1 April 2013, the Scottish Police Authority has overall responsibility for administering the budget for the Police Service of Scotland. The Chief Constable is responsible for the day to day administration of the Police Service, including the allocation and deployment of resources received from the Authority.

The Scottish Government also funds a number of organisations that provide direct support and assistance to people who are the victims of illegal money lending and to help people access legitimate sources of credit. This includes funding to Citizens Advice Scotland; Money Advice Scotland and funding through the Legal Aid Fund to local money, debt and welfare advice services. On 21 January 2013, the Deputy First Minister announced additional funding of £5.4 million over this and next year to provide access to advice, information and representation services for people affected by the UK Government’s changes to the welfare system. Money advice and financial education can assist in improving people’s financial management skills and the issues that lead to financial difficulties.

We endorse actions by relevant agencies to do more to identify and tackle illegal money lending. Encouraging people to report and prosecuting illegal lenders is part of that response. However, more also needs to be done to address the underlying reasons why people fall prey to illegal lenders, including reducing financial exclusion and expanding information about and access to legitimate sources of credit.

The Scottish Government does not directly fund money advice services. We provide third tier funding to the Money Advice, Training, Resources, Information and Consultancy Services (MATRICS) project. The purpose of MATRICS is to provide ensure there is a skilled money advice workforce which embeds the Scottish National Standards for Information and Advice Providers across the sector. No data is collected through this project on the prevalence of debt.

The Scottish Government also provide funding to the Money Advice Trust (MAT) to support the National Debtline. Under the terms of this grant, MAT provides all funders including the Scottish Government with a quarterly report. The report provides a breakdown of the most reported debt types, which are: mortgages, rent, council tax, hire purchase, payday loans, telephone, water, catalogues and fuel debt.

The area of consumer credit, including pay day lending is currently a reserved matter; therefore the Scottish Government does not have the powers to collect this information from pay day loan companies.

We currently rely on published data by the UK Government and its associated departments to assess the extent of and trends in payday loan debt. I acknowledge that the rise of payday lending is fairly recent and the actual amounts being loaned by the high-interest sector is difficult to gauge.

The Office of Fair Trading (OFT) estimates the market for payday loans to have been worth £2-2.2 billion, in 2011-2012 based on the information provided by payday lending companies in 2012.

We will continue to monitor the prevalence and issues relating to payday loans through external research and continued engagement with stakeholders.