Summary

The lobbying group

Debt on our Doorsteps

estimates that as (personal secured loans) many as 7million people are forced to use loan sharks because they can't find credit elsewhere and are therefore being charged astronomical interest rates. The Competition Commission plans to put a stop to it.

Loans. Loan Sharks - who and what? Part 2

Author: Michael Challiner

The Government has also recognised the problem and is working on establishing

a fund to help alleviate financial exclusion.

We appreciate that this means that the lenders will experience significant levels of bad debt and the collection cost are high, but in our view, loans and credit on these terms will only serve to push their clients deeper into the financial quagmire.

Financial Provident is the biggest lender in the home credit with more than half of the market. But with their credit card with a 70% interest ticket, do they really believe this is good value?

On the surface of it they do, and Financial Provident's spokesman explains, "Customers are not being overcharged for their home credit loans, nor is the home credit sector making excessive profits".

The Competition Commission wants customers to be given clear information on the full cost of the loans and hope that once they appreciate the cost, they'll think more than twice.

The commission also hopes to encourage more price competition ( life assurance ) amongst the existing players in the market. The provisional proposals will be out later this summer.

The Government is also urging consumers who have ( motor insurance quotes ) fallen victim to loan sharks to report them to the police or the Department of Trade & Industry.

It might appear there are no alternatives to loan sharks - but there are. To find out more about your borrowing options check the Citizens Advice Bureau at http://www.citizensadvice.co.uk/