Appendix 2 Economy Committee – 9 December 2014 Transcript of Item 5: Investigation into Personal Session Two

Jenny Jones AM (Chair): This is our second session today. We are going to talk about illegal moneylenders, which is something that we are quite concerned about generally.

We have Tony Quigley, who is Head of the England Illegal Money Lending Team, which sounds really great; Rob Gardner, who is Licensing and Trading Standards Manager for London Borough of (LB) Lambeth; Charles Okello, Operations Manager from Lambeth as well; Maureen Smith, Client Performance Manager from Lambeth; and then Sheila Lahey, Fair Trading Officer from LB Enfield. Welcome to all the council officers. We realise that it is a problem for all boroughs but we have heard you are dealing with it particularly well, we hope.

Fiona Twycross AM (Deputy Chair): I want to just kick off by talking about what the extent of illegal moneylending is in London and how it has changed in recent years?

Tony Quigley (Head, England Illegal Money Lending Team): If I can start first of all by saying it is very difficult for us to put a baseline on illegal moneylending, clearly, because this is criminality that it goes under the radar. What we are finding is that illegal moneylending is embedded in communities and has been for many, many years, to the point where it becomes, I suppose, the social norm for people to go to a shark.

There was some research that was done back in 2006 and then subsequent research done in 2010, but it was on a countrywide basis rather than regional basis. In 2006 the estimate was that 165,000 households in the UK were using illegal lenders. In 2010 it had practically doubled to 310,000. The only thing really I can say is that if we base it on population, London has a population of 8.2 million, which is about 12% of the UK’s population, and that would mean that across London, roughly, there are about 40,000 households that are using illegal lenders. It is very difficult for us, as I said, to put a true figure on it because what we find is that people contact the team when they are at their most desperate. We know that, for example, the primary debt to anybody is the , without a shadow of a doubt, regardless of rent. We have some statistics that show that rent arrears rise when a loan shark is operating, crime figures rise and those sort of things.

We also estimate that on average a person will have three or three-and-a-half per year. The average loan to a loan shark will be that they pay back double. We believe about £700 million goes through loan sharks’ pockets annually. If you work that out, there is about £88 million going through loan sharks’ pockets in London based on the 12% figure, which equates to roughly about £2,500 per household that goes to loan sharks. It is very rough mathematics in terms of that. Obviously some of these are very much guesstimates.

I have to stress that clearly loan sharking is criminality. They will not advertise what they are doing. Generally speaking, they operate on a word-of-mouth basis and it is very much from peer to peer. People will know of the local loan shark and then introduce people through that. The loan shark will not operate with people outside of their circle. It is not a case that you can, as a stranger, go up to them and say, “I hear you are doing loans. I would like a loan”. To infiltrate that criminality we have to wait until somebody is ready to come forward and we keep pushing the message out as much as we can.

Fiona Twycross AM (Deputy Chair): In the last session one of the panel members mentioned the use of websites and web advertising for illegal lending. Is that something you have seen a growth in?

Tony Quigley (Head, England Illegal Money Lending Team): We do know of websites that are offering loans. It tends to be from outside the country coming in. We have actually seen a loan shark who was advertising on the internet. I understand there are also things like Facebook and other sorts of social media where people will say, “I need a loan”, or, “I am offering loans”. We try to trace that as much as we possibly can. The one that we did come across basically was fraud rather than illegal moneylending because what they were doing was that there was a hook there and when they had you in they then wanted you to pay an administration fee in order for you to be put onto their list, so to speak.

Rob Gardner (Licensing and Trading Standards Manager, LB Lambeth): It is difficult to say. What is interesting is that I have worked in trading standards for nearly 30 years and in that time I have had one complaint about an unlicensed moneylending trader who then actually turned out to be licensed. What he was doing was holding benefit books and then cashing them in himself in terms of the .

The problem that we have is that people will not necessarily come forward. Victims will not come forward to report it. This is where the success of the Moneylending Team, in national terms, has come in because they can offer the support and guidance to victims which previously did not exist. We would find ourselves perhaps still talking to a victim. You have heard Tony [Quigley] say that the moneylenders tend to be embedded in communities. They know their victims. They know where their children go to school. They know where they live. This is not in any way a remote business. It is very much in your face. Victims feel obviously intimidated about coming in to report matters to local authorities who are as much in the community as they are. In that respect officers themselves might be under threat. We are talking about very nasty criminals here who will stop at nothing to keep their income streams coming in.

The success of the team is that they have found these people know and they are starting to find them because people feel encouraged to ring the hotline and get the advice they needed. Although the team itself is based in Birmingham, it has regional officers who support the victims. That is what is critical in all of this: the support that they can lend to victims.

The council’s role is away from enforcement. I am sure you will hear from Sheila much more about what we can do to prevent it. That is our primary role as local authorities in situ.

Sheila Lahey (Fair Trading Officer, LB Enfield): If I give you the experience of what happened in Enfield. I have been working with the regional officer for the Illegal Money Lending Team since September 2012. Since then we have been able to organise or co-ordinate over 40 advocate training sessions with partners, service users and anybody who wants to listen. Obviously, there is always a first step. Where do you start?

Just to answer your precise question about the extent of the illegal moneylending - like Rob we have never had any reports because it is under the radar. People do not voluntarily say, “I have borrowed money from a loan shark. Can you help me?” The thing that ties them in is the perception and the fear of what will happen if they do not pay and if they go and report the matter. They feel also that they too have done something wrong and so there is a real programme of education.

I had a phone call from Anna Fraser, who is our Liaison Officer [London Region, England Illegal Money Lending Team]. She said, “We have had a victim come forward, but we need to interview him away from his house and we do not know where to go”. We organised it so that the victim could come to the Civic Centre and use one of the interview rooms. He spent the whole day literally telling her and the investigator of the problems that he was facing. He owed money to an individual who was also connected with serious crimes. He needed the money to pay off a drug consignment. We are not talking about lightweight characters here; we are talking

about really unpleasant individuals. He presented as a person who had been involved in his community. He had been involved in local politics.

Jenny Jones AM (Chair): Is this the victim or --

Sheila Lahey (Fair Trading Officer, LB Enfield): This is the victim. At the end of the interview, I was not part of it but I came out just to see how things were, he sat there and he had his head in his hands. I said, “What is the situation with borrowing money in Enfield?” He said, “It is rife.” We had no idea because it is not something that people will ever come forward about. Really, from there we had to take it further. We were politically and morally obliged and required to see actually what could be done.

We went through a series of training people working in the Citizens Advice Bureau (CAB) on what to do, how to recognise somebody that might be in trouble with a loan shark, asking that question when they have gone through all the debts that they owe, “Do you owe any other money? What other money is owed?” and then being confident enough to say, “Have you borrowed money from a loan shark?” and then what to do. It was very much spreading the message, getting the message out there into the community and targeting those particular groups that do not have access to . I am talking about people with various disabilities. Anna [Fraser] came down and spoke to Disability Action, whose clients often do not have access to banks. I am not aware of what is available. We started a whole range of training sessions co-ordinated through Trading Standards. We have in place - and I would urge any local authority to ensure that they have in place - a protocol agreement with the Illegal Money Lending Team which allows them certain facilities in order to go into the borough.

The next level is then about including the council’s financial strategy and incorporating it into everything that they do. Currently we are working on Mind the Gap. It is a policy document being put together by [Enfield Council] Cabinet Members which identifies the extreme differences in life expectancy in the borough between the wards. What we have done within Trading Standards is we are targeting - because it is about targeting - those areas where we have greater financial and social deprivation. That is where we are going to get that type of activity, not exclusively, but that is where they are going to focus on.

We have also signed up to the Illegal Money Lending Team’s excellent lesson plan. It can be tailor-made to suit the needs of the schools. In June we had 60 schools sign up for it. Following on from this Mind the Gap, we are meeting with Edmonton Green Consortium so that we can get that out there.

I was at the earlier session as well which was interesting because Andrew [Boff AM] talked about how we address this whole question of financial literacy. My head was in a spin over APR and compound . I am not great at maths but I can work my way around. One of the issues that really needs to be addressed is the whole question about financial literacy and getting to the schools to get them on board about what they need to know. By teaching the children, they go home and hopefully spread that message to their parents. We have a very all-embracing package of measures.

Jenny Jones AM (Chair): You have covered a lot of areas we will come back to, actually.

Sheila Lahey (Fair Trading Officer, LB Enfield): Sorry, I just wanted to lay it on the table.

Jenny Jones AM (Chair): No, it is very good. Thank you.

Stephen Knight AM: A protocol was mentioned between the borough and the Illegal Money Lending Team. I wonder if Tony could tell us if all London boroughs have a protocol in place or do you have some that do not?

Tony Quigley (Head, England Illegal Money Lending Team): Yes, they do. We are just going through a renewal process at the moment. If I can just explain this, the legislation that we used to enforce was the Consumer Credit Act 1974. The Consumer Credit Act placed a duty on local authorities to enforce the provisions of the Act. In order for an outside team to come in and enforce those provisions, the local authority would need to delegate that power to the England team to operate in their area. It is more an enabling provision for us to be able to investigate matters.

Clearly, what has happened at the moment is that we have now changed regimes and have gone to the FCA. As a result of that, the legislation has changed. There is still a duty on us to look at the authorisation of businesses, but we now need to update and upgrade those protocols. We are going through that process at the moment. We do not just deal with London. Although obviously this is London-centric, we have in place over 370 protocols. We are hoping that there is a legislative change coming up that possibly will be in place by October 2015. As a result of that, the protocols will no longer be needed to enforce the legislation because they are going to move it so that we are empowered to prosecute across the whole of England and Wales. There is a change coming up.

In answer to your question, yes, they are all signing up at the moment but they are going through the process to get that ready for next year.

Jenny Jones AM (Chair): Which Bill is that, then?

Tony Quigley (Head, England Illegal Money Lending Team): The Consumer Rights Bill. There is a specific mention in respect of Illegal Money Lending Teams to remove the boundaries. At the moment, most of the legislation for Trading Standards specifically sets the boundaries within that authority. That has been removed.

Stephen Knight AM: In relation to the law, there is informal lending. If I borrow money from Andrew [Dismore AM], let us say, is that illegal in terms of --

Andrew Boff AM: No but it would be very unwise!

Tony Quigley (Head, England Illegal Money Lending Team): It is not. In simplified terms, it is illegal if you are operating a business.

Stephen Knight AM: All right. If I were making money out of lending money to Andrew?

Tony Quigley (Head, England Illegal Money Lending Team): Not even that. It is whether, on the face of it, it looks like a business. If it looks like a business, it is a business and you need to get authorised.

Andrew Dismore AM: If I were to lend money to him, it would not be a big deal, although it would be at my risk. If I were to lend money to every Assembly Member, it would look more like a business?

Tony Quigley (Head, England Illegal Money Lending Team): Potentially, yes. There is what is called ‘incidental lending’. The purpose behind that is that when they introduced the legislation back in 1974 - and obviously the change going on into the new Financial Services and Markets Act - the incidental lending was to

prevent people from falling foul of legislation if you gave your son a tenner to put some petrol in his car - which is something that occurs in my household quite regularly! What it did mean was, of course, that would not be covered by the legislation. It is business. If you are in a business and you are operating a business and you are lending money, then in essence you need to be authorised.

Andrew Boff AM: What makes people choose unlicensed loans rather than the alternatives that are available?

Tony Quigley (Head, England Illegal Money Lending Team): We did a quick survey in respect of this about two years ago. We believe there are three reasons.

The first one is that generally people believe that they are financially excluded and in many instances potentially they are not. There are a number of people who are particularly vulnerable to loan sharks. Those would be the obvious sectors within the community: people on low incomes with high rents and that sort of thing. We also come across people who are working and have been working but for some unknown reason believe they are financially excluded. That is the first one.

The second one is that generally something happens that invokes using a moneylender, for example, an emergency, a washing machine or a bill comes in that they are not expecting, a utilities bill, that sort of thing. They get a decision there and then. That is the second one. They will make a phone call to the loan shark, “I have a bill. Will you lend me the money?” They say, “Yes, I will”. That is the second element: an instant decision.

The third one was we found actually people were put off because of filling in forms. Some people just do not like filling in forms and like the idea of getting that instant decision with the cash. One of the examples I can give is one of the very first loan sharks that we arrested and prosecuted in Birmingham because at the time we were a pilot project that was just operating across the Midlands. This particular individual used to carry about £12,000 around with him in a plastic wallet. He would take the opportunity to lend as much of that as out as he possibly could. When we arrested him and searched his property, we found his books. In his books, he had 400 loans outstanding and of that there was £280,000 that was in the community. He was looking at a return within seven weeks of £802,000. That is the sort of money we are dealing with that loan sharks are making. Of course, up until that stage it was relatively risk-free. He was basically taking advantage of the most vulnerable members of the community.

Let us go back to real basics here. Because this is community-based, you are dealing with a loan shark who operates within the community, who is known within the community and who comes across as your best friend. This is why, psychologically, there are some real barriers to overcome in respect of trying to get people to come forward.

Andrew Boff AM: Which barriers?

Tony Quigley (Head, England Illegal Money Lending Team): The barrier is overcoming that people believe that the initial transaction is one of friendship.

Andrew Boff AM: There is deceit in that original relationship?

Tony Quigley (Head, England Illegal Money Lending Team): Yes, definitely. If we take this particular individual, I will always remember, and it was quite unsettling for me because the first person we took a statement off said, “When I first was introduced to Arnie” - his name – “I thought he was my best friend”. She

was introduced through a friend. In essence, he built that relationship and rapport with her and then he started, “Do you want a loan yet? Do you want a loan yet? Go on. You are feeling miserable. You are feeling down. Do you want a loan yet?” So it went on. In essence, she had a loan of £300 and was expected to pay back £700 at £50 a week over seven weeks or eight weeks. What happened was that during the course of that, he then said, “Your ex-boyfriend owes me money and you are going to pay it”. Now all of a sudden she realised she was in this trap.

The psychological barriers are that if she goes to the authorities her friend is the one who has introduced her and so all of a sudden she has a relationship with her friend whom she has to protect and also the fact that he was well-known in the community. She had relatives that were still living there and so even if she came to the authorities and we moved her, she was leaving behind a network of family members that in essence he can try to control.

What we believe is that actually loan-sharking is about a power and control relationship. They hold all the power. They hold all the control. They will tell you when you pay.

Andrew Boff AM: It is not dissimilar, by the sounds of it, to the relationship that a trafficked person would have with their person in control.

Tony Quigley (Head, England Illegal Money Lending Team): Absolutely. We do see some synergies with that, as well as illegal sex workers and that sort of thing. In essence what we are dealing with is the sort of criminality that comes under the radar and then is built on that relationship.

Andrew Boff AM: We are talking about this being within communities. Are there certain communities that are more vulnerable to illegal moneylenders? Is it across the community?

Tony Quigley (Head, England Illegal Money Lending Team): It is across all communities.

Andrew Boff AM: Yes, I thought so.

Tony Quigley (Head, England Illegal Money Lending Team): If we go out and effect an arrest and it is well-publicised, what we find is there is an increase in calls. It generates and snowballs from the work that you do within the community. Sheila was saying that when you raise awareness within the community, what you have to do when someone picks up the phone and rings you is you have to support them fully at that point. If you do not, what happens is the word spreads around the community, in essence, “No point in ringing them because nothing happens”. From our perspective, we have those measures of support that are involved.

Andrew Boff AM: Without attributing it to any particular community, there is no particular way in which you can target. We heard earlier from Enfield about targeting the deprived wards in particular. What would you say to that?

Tony Quigley (Head, England Illegal Money Lending Team): We are targeting. We do a lot of targeting work. We are doing it through partner agencies rather than directly into the communities themselves. Clearly, we are a very small team. We have to try to spread the message as much as we can. In essence, our partner organisations have to become our eyes and ears. The way we do it is through things like, as Sheila mentioned, the education plans. We took some money that we had taken off a loan shark and put it aside and created some lesson plans that were designed by teachers for teachers. There are over 6,000 schools in England at the moment that are using them. They start at a very early age about needs and wants and what the difference is between needs and wants. As it builds up and as we go into the teenage years, we then start talking about

loan sharks. Clearly what we do not want to do is to frighten a six-year old about what is going on with a loan shark.

Andrew Boff AM: I am sure ‘sharks’ sound like fun to a six-year old, yes.

Tony Quigley (Head, England Illegal Money Lending Team): Yes. Ultimately, the idea is that they go home, they do their homework with their parents or even just in a conversation they say, “What have you been doing today?” “We have been talking about money and loan sharks”. We have had some success there. People phone us as a result of the kids taking things home to the parents through the lesson plans.

Andrew Boff AM: Look, it sounds to me from what you are saying that people are not taking advantage of services that are there due to lack of information. Is that correct, would you say?

Tony Quigley (Head, England Illegal Money Lending Team): No. It is catching people at the right time. That is probably the easiest way to explain it. As I said, people will only phone you when they are at their most desperate because of all the added issues that arise with loan sharks. It is catching them at the right time. The more we can spread the message --

Andrew Boff AM: Say somebody is under stress. Surely they see a range of choices in front of them, but they are choosing to go to the illegal loan sharks --

Tony Quigley (Head, England Illegal Money Lending Team): Potentially. Yes, you are right.

Andrew Boff AM: -- rather than credit union short-term loans that we heard about earlier, which can perform a function for people.

Tony Quigley (Head, England Illegal Money Lending Team): Yes, definitely.

Andrew Boff AM: They are choosing the unlicensed ones?

Tony Quigley (Head, England Illegal Money Lending Team): Yes, but it is generally because of the relationship that they see.

Jenny Jones AM (Chair): Before you go on, can I ask if loan sharks are ethnic-specific? Would you have loan sharks --

Rob Gardner (Licensing and Trading Standards Manager, LB Lambeth): There are ethnic networks. One that was recently uncovered was a Filipino network in the Ilford area. I am aware of Sri Lankan networks that were happening before that.

Tony Quigley (Head, England Illegal Money Lending Team): Yes.

Rob Gardner (Licensing and Trading Standards Manager, LB Lambeth): There is a community thing. There might well be small businesses engaged in this. It is not just people who are on a sort of last resort. They just feel more confident in relation to borrowing money from someone who speaks their own language, perhaps. This might be a London dimension.

Andrew Boff AM: It works in communities, but it is not exclusive to communities. Is that correct?

Rob Gardner (Licensing and Trading Standards Manager, LB Lambeth): Yes.

Andrew Boff AM: The community is the network in which loan sharks operate, but it can be any community where it happens. Is that what you are saying?

Tony Quigley (Head, England Illegal Money Lending Team): Yes. Absolutely.

Jenny Jones AM (Chair): Are there any communities that are invulnerable because their is so strong that they actually lend money informally rather than go to loan sharks? No?

Tony Quigley (Head, England Illegal Money Lending Team): No. We have come across loan sharks in pretty much every community. Rob [Gardner] is actually right, we were talking about this. One of the key things for London, of course, is the demographics. Obviously you have a big migrant population that comes to London and then in essence lives within their own communities. What tends to happen is that we see sometimes they bring the culture that is acceptable in terms of moneylending over to that community. They operate exactly the same, without the realisation that actually it is a criminal offence, without the realisation that --

Andrew Boff AM: It does sound terribly familiar. It is terribly similar to trafficking because people tend to like to think that that operates in particular communities when of course it does not. It happens in every single community, but it uses the community in order to do it with the people in that community in order to transmit people.

Tony Quigley (Head, England Illegal Money Lending Team): This is very much community-based. There are no two ways about that.

Andrew Boff AM: Yes, I get that.

Tony Quigley (Head, England Illegal Money Lending Team): It is very much that everybody knows what is going on in the community. When they did the research back in 2006 and 2010, the key finding was that the people who go and use illegal moneylenders are the most hard-to-reach individuals in the community. We have tried everything in terms of media and in terms of engagement. What they came back with was that generally speaking it is a one-to-one face-to-face that will bring out what is going on in terms of that because of the fear factor. I suppose the synergy with people-trafficking would be exactly the same. The control around the individual becomes complete.

Jenny Jones AM (Chair): By the way, I just wanted to clarify. When I said “ethnic-specific”, what I was wondering was if the Filipino community would automatically have a Filipino loan shark and the white community would automatically have a white --

Andrew Boff AM: It sounds like they would, does it not?

Tony Quigley (Head, England Illegal Money Lending Team): In general that would be the way. I mean --

Jenny Jones AM (Chair): You would not find a sort of multicultural loan shark?

Tony Quigley (Head, England Illegal Money Lending Team): Yes, you do. It is about whether or not they are in the community and accepted within the community.

Jenny Jones AM (Chair): A community might be a geographic one as much as demographic?

Tony Quigley (Head, England Illegal Money Lending Team): Yes.

Andrew Boff AM: Exactly. It depends how you define a community. It is this idea that there are some communities where it does not happen that is what we have to disabuse ourselves of because it happens everywhere.

Tony Quigley (Head, England Illegal Money Lending Team): Yes. One of the things that people have said previously is that it would not occur in the Pakistani community and actually it does.

Andrew Boff AM: If I can shift now to the boroughs, to what extent do people with council arrears turn to high-cost credit or unlicensed loans? Is that something you have seen at all?

Maureen Smith (Client Performance Manager, LB Lambeth): From the service area, I would not really know that. We know what percentage of people pay by credit card for their council debt, Council Tax, sundry debts, business rates, etc.

Andrew Boff AM: What is that figure?

Maureen Smith (Client Performance Manager, LB Lambeth): For Council Tax, we receive about 12,000 transactions a year by credit card.

Jenny Jones AM (Chair): Out of?

Maureen Smith (Client Performance Manager, LB Lambeth): We have 128,000 properties and the majority of them pay ten times a year or in some cases 12 times a year. Business rates are quite small for credit card payments. They tend to be more electronic payments by debit card. There are maybe 3,000 transactions a year for business rates. I do not really know what it is for rents. I can get you that information if you want it.

Andrew Boff AM: That is not an indication in itself, is it? I have done that. I have paid my Council Tax by credit card. It is not necessarily an indication that you are struggling. It is just easier to use a credit card sometimes.

Maureen Smith (Client Performance Manager, LB Lambeth): Yes, and then clear it off each month. With regards to people borrowing money to pay for council services, I do not get told that.

Andrew Boff AM: How would you find out that?

Charles Okello (Operations Manager, LB Lambeth): Just to add to what Maureen [Smith] has just said, there are the services also within the council like sundry debts, which is a lump term. It is a basket of debtors. For instance, you know, you have idle debts. You have probably commercial waste where people pay for it. This information probably will pick up in terms of the credit card numbers and bring it back to you with the other ones Maureen has just mentioned.

In terms of linking up to illegal moneylending, we have people who actually have fallen on hard times and they cannot pay their debt. When you look at a debtor, you look at that individual to begin with. You know that they are falling into arrears and they cannot make payments. You start engaging with them. Once you start

engaging with them initially, they may tell you a story and you can probably work out a plan for payment of their debts. However, sometimes the story does not add up and so you may want to take a financial statement. Within that financial statement, you will find they give you income and expenditure details which they complete. You begin to identify that they do have other debts apart from this one they owe to the council. Within these debts, normally you just look at the creditors and the creditors do not come to us as ‘others’ which are probably illegal moneylending. We cannot identify from that. We can identify their debt as being either from banks, , loans, or certain organisations that obviously lend money or that they have borrowed money from. Once they put that together as their overall outgoings, then we have to prioritise their debt to reach an agreement with them.

Having said that, some people do not come to us as a first port of call. They have multiple debts with many organisations. They may have commercial debts elsewhere. The council may be just one of their creditors when they have had services from the council. By the time they come to us, they will have already agreed a payment plan and so it is a third organisation approaching the council on their behalf and telling us, “This individual has offered to pay so much against settling their debt. If you accept it, we can confirm it to you and we will be remitting money on a regular basis to you”. The risk with that is that on certain occasions some third-party organisations will charge a fee for that administration. This obviously is eating out of what they are trying to contribute to their creditors.

I do not know if there is any link from the work Tony [Quigley] has done to find out if some of the people on the illegal moneylending books have also indebtedness with the council. That could be a problem area to be explored. We actually do not know whether we can link them straight to any illegal moneylending.

Andrew Boff AM: What triggers your work then on working with the person or the debtor? I have a reason for asking this.

Maureen Smith (Client Performance Manager, LB Lambeth): It is normally on a case-by-case basis. We will issue a summons or a final reminder. They will contact us and say, “I am having problems”. Sometimes they will turn up at court and that is the first time we know that there are problems. Sometimes an enforcement officer will go around to collect the debt and will phone us to say, “There are vulnerability issues with this person”.

Andrew Boff AM: I do not know Lambeth’s procedures and you may be wonderful in your procedures and you might not send out enforcement procedures for a £2 debt, but there are boroughs in London that do and increase the stress on those people who are experiencing tough times. That then pushes them into finding ways of securing that because those letters you send out can be pretty severe to people. This is why I am interested in knowing at what point you start working with the person. I have taken up casework before from people who are distressed that they are going to lose their homes because they are £2 in debt.

Maureen Smith (Client Performance Manager, LB Lambeth): What we started doing this year when we are sending out reminders and final notices for Council Tax is we have an advice agency on board with us, St Mungo’s Broadway. A leaflet goes out with the reminder or the final notice that says, “For independent debt advice, contact us and we will speak to the council on your behalf”. Previously we have only been doing it with final notices and with summonses. This year we started to do it with reminder notices as well to try to get to them that bit quicker before they have incurred the court costs.

Andrew Boff AM: Yes. This is the point I am trying to make and by that point, by the point of summons, some of those people have actually gone off and obtained their illegal loan. You possibly would not see them at the summons, only the people who have not gone off and obtained their illegal loan.

Maureen Smith (Client Performance Manager, LB Lambeth): Yes. That is working quite well for us. What we have been doing when we have the final notice ones is we are telling people, “If you do not make payment or contact us within 14 days, your right to pay by instalment is going to be withdrawn and you will receive a summons”. That report we have been sending to the debt advice agency with customers’ telephone and contact details on it so that they can actively call them and contact them --

Jenny Jones AM (Chair): Is that legal?

Maureen Smith (Client Performance Manager, LB Lambeth): Yes, we have agreements with the advice agencies for us to share that data. We are not breaching data protection or anything like that.

Andrew Boff AM: It sounds very good what you are doing. So that I am clear, on the reminder, you then send a piece of advice through and are you making personal contact with some of those people, then?

Maureen Smith (Client Performance Manager, LB Lambeth): Yes. The debt advice agency is half-and-half because you find the majority of debtors do not want to engage with the council directly. They will feel a lot better with dealing with a debt advice person because they can help them with all of their debts, whereas we can only help them with their council debt. With a lot of people, you will find that every year they receive a summons and therefore they put their heads in the sand, really, whereas we are finding especially with Council Tax support customers that they will deal with the advice agencies. We are getting to know about a lot more vulnerable issues than we have ever known before.

Sheila Lahey (Fair Trading Officer, LB Enfield): One of the things that we did within Enfield as part of the advocacy training was to invite Anna [Fraser] along to speak to the Housing Benefit officers and housing enforcement officers. What she encouraged them to do, which we now look at, is when they see activity going on in an account which historically is always in arrears and then they see a payment, the scenario to that is that somebody has themselves in bother. Tony [Quigley] mentioned earlier what the triggers were that force a person to seek assistance from a loan shark and that might be one of them. They might have had to make a choice between fixing the machine and paying their rent. The rent takes a back slide and they build up arrears. They are approached by a loan shark, “Look, you are in a bit of bother. Here is money to cover your arrears, plus a little bit extra that we can pay into your account”. You suddenly go from having someone who is struggling to make their financial commitments to suddenly having credit. Then, within a few weeks or however long, they will ask for that money back and, because we are not banks, we have to pass the money back. It is a way of helping to identify whether there is a potential victim there and also, because of the criminality, it is a form of money-laundering. It is looking at that and looking at the whole picture.

You talked about confidentiality. When that type of activity is highlighted on an account, we ask the officers to notify the Illegal Money Lending Team’s helpline with the postcode area. Then, because they have investigators, they can then observe because it will not just be that particular individual who is caught up. There will be a pattern and they aim to then build the intelligence.

Jenny Jones AM (Chair): How do you highlight that, though? Who highlights that?

Sheila Lahey (Fair Trading Officer, LB Enfield): That is not my area because I work for Trading Standards, but I know there will be systems in place which will show accounts to be stressed and then coming out of it. I do not know if they are called ‘stressed’, but where they are in arrears and then miraculously they are suddenly not only meeting their arrears but there is a bit extra.

Jenny Jones AM (Chair): No, I understand, but is it true that there is some sort of flag for that?

Maureen Smith (Client Performance Manager, LB Lambeth): We would send out at the beginning of the year up to 20,000 recovery documents a week. We would not have the resource for someone to sit there and manually look at the individual accounts. It is when a customer makes contact with us and obviously now working with the debt advice agency and it making contact with a customer on our behalf.

We are also doing a joined-up project at the moment because for a lot of debtors, if they have rent arrears, they will tend to try to get advice on that a lot quicker than they will for Council Tax because they want to keep the roof over their heads. We are looking for the debt advice agency to do multiple debts now for us.

Stephen Knight AM: I just wondered whether you could tell me how many court summonses Lambeth issues annually, just so that we get a flavour of the scale.

Maureen Smith (Client Performance Manager, LB Lambeth): I can give you a rough idea. It is about 25,000 a year.

Jenny Jones AM (Chair): How many of those actually come to court?

Maureen Smith (Client Performance Manager, LB Lambeth): What, people turning up?

Jenny Jones AM (Chair): All of those go to court?

Maureen Smith (Client Performance Manager, LB Lambeth): Yes, for a summons hearing.

Jenny Jones AM (Chair): People cannot say, “Here is all the money”?

Maureen Smith (Client Performance Manager, LB Lambeth): Yes, you can.

Jenny Jones AM (Chair): All right.

Stephen Knight AM: That is one in ten households, almost, or roughly one in ten households being taken to court.

Maureen Smith (Client Performance Manager, LB Lambeth): That reduces throughout the year. Because we start at 1 April, you will probably find that we have maybe 4,000 to 5,000 cases that are due a court summons and then, as you go down to November onwards, it drops to about 1,500 a month.

Fiona Twycross AM (Deputy Chair): Have the court summonses gone up since more people are expected to pay Council Tax now?

Maureen Smith (Client Performance Manager, LB Lambeth): The Council Tax support?

Fiona Twycross AM (Deputy Chair): Yes.

Maureen Smith (Client Performance Manager, LB Lambeth): Because what we try to do is engage with them through the debt advice agency, it did the first year of Council Tax support. Our summonses did increase. This year, we have tried to exclude them from a lot of the summonses ones and engage with them

more. We are sending text messages to people, “Please contact us”, and emails to people when we have their email details.

Fiona Twycross AM (Deputy Chair): Yes. Because of the use of the debt advice services, are the number of summonses going down now?

Maureen Smith (Client Performance Manager, LB Lambeth): Yes. Sometimes we do not have any choice. We have to go ahead with the summons because then we can do an attachment of their benefits and we will do it that way. Unfortunately, without a liability order we cannot apply for an attachment, but in those cases, once the attachment is in place, we will take off the court costs and then they are not incurring those costs going forward.

Stephen Knight AM: Could I just finally ask if you ever sell on debts to the agencies?

Maureen Smith (Client Performance Manager, LB Lambeth): No.

Stephen Knight AM: Do you know of any boroughs that do?

Maureen Smith (Client Performance Manager, LB Lambeth): We do not sell on debts. We will pass liability orders to enforcement officers or bailiffs who are regulated now with £75 for compliance fees, etc, but we never sell on, no.

Andrew Dismore AM: You set out what seems to be a relatively sympathetic approach, but the CAB says that the number one debt in 2014 is Council Tax arrears with the top ten local authorities using bailiffs in London. You have just been asked about debts being sold on. I give you a bad example, Barnet Council, which has now privatised Council Tax collection and made it a performance indicator to get all the money in.

I have loads of examples but in one here, a single parent received a Council Tax demand out of the blue going back over seven years on the presumption that the single-person household she claimed discount for was not a single-person household because her children were in studies. She was asked to produce back over seven years the exact dates they were studying. While she was in negotiation with the council, it took £2,500 out of her bank account by direct debit with no sort of discussion. That is typical of what is going in Barnet. I suspect that what you describe may be a sympathetic approach, but we have had dozens and dozens of cases. I have loads just being emailed to me about people who have been caught in this way.

Although they are not necessarily sent off to bailiffs, the approach they are adopting is very aggressive indeed because they are not sending out proper accounts of how the debt has been calculated. They are not sending out sympathetic letters. They just say, “Give us the money. You owe this money. Give us the money. You have been fraudulent”, and so on. They are very aggressive letters. I have seen some of them.

You have come along because you are happy to defend your practice, but I understand we tried to get other councils to come along that were not prepared to do that. The evidence we have had previously is that when it comes to trying to deal with money advice and trying to help resolve debts, councils are the worst in terms of trying to deal with those circumstances. With credit card companies and all those sorts of things you can negotiate a repayment schedule, but the councils just will not have it.

Jenny Jones AM (Chair): We could write to Barnet Council actually and ask them if they feel that they are pushing people into illegal debts.

Maureen Smith (Client Performance Manager, LB Lambeth): We have never taken that stance. Regardless of which debt advice agency contacts us, we will always go along with what they are saying. They have the customer in front of them. A lot of times, if they have a really vulnerable person with them who is very emotional, they will call us and say, “Look, I have this person in front of me”, and we will deal with the account there and then.

Going on your point of a single-person discount being removed, we do not go back seven years but we will take that off if we have done an Experian [credit] check on an account and it does show financial activity for another person when there is only supposed to be one adult in the property. We will remove it as well but only to the previous year. We will not go back further than --

Jenny Jones AM (Chair): That is very reasonable.

Andrew Dismore AM: These people actually were students. They were students and the problem was they had a huge debt dated going back seven years.

Maureen Smith (Client Performance Manager, LB Lambeth): You can normally tell. If a customer calls us back up and says, “I received a bill showing arrears for last year”, we say we have taken off the single-person discount because we have had a credit reference agency come back and say that there is another adult in the property. If they were to turn round and say, “It is my son. He is away at university”, we can go back to the credit reference agency and get the information as to who they are saying is in there. If it ties up, the single-person discount goes back on to the account. If we can do it that way, I do not see why other authorities could not do exactly the same.

Andrew Dismore AM: I know. They are still arguing about the period in the summer holidays when the student daughter was living abroad, but there we are. It is a more general issue.

Do you consider yourselves to be a model of good practice?

Maureen Smith (Client Performance Manager, LB Lambeth): We are getting better. We are all under pressure to improve collection because budgets are being cut and everything but at the same time we do have a responsibility to our residents to help them in any way we can. We have a complaint procedure that is taken very seriously by directors and members, etc, and we have really good working relationships.

Andrew Dismore AM: What is your collection rate?

Maureen Smith (Client Performance Manager, LB Lambeth): The Council Tax is 94.5%, which is lower than the London average. For business rates, we are just over 98% and we are one of the top ten.

Andrew Dismore AM: Do you think you can get money in over a longer period and the arrears in by a more sympathetic approach or do you think you just have to write them off?

Maureen Smith (Client Performance Manager, LB Lambeth): We have protected groups that we do not send to the enforcement agency: people with disabilities, fee disabilities, people affected by the benefit cap, carers and obviously pensioners. If they are in receipt or were in receipt of a full Council Tax benefit and now, because of the changes they are only getting partial Council Tax support, and if they have arrears prior to 2010, then we are considering those a write-off. We do not cause poverty to the person by making them pay off those arrears as well.

Stephen Knight AM: I just want to turn to the issue of the new caps that are coming in from January and the impact they may or may not have on the illegal lending market, or indeed on driving more people to seek advice, which is what we would hope they would do rather than turn to illegal lenders. I just wondered, Tony, if you want to start off, whether you have a view on whether or not you are expecting to see an upsurge in illegal lending activity when the cap comes in and some prospective borrowers are turned away by the official payday loan.

Tony Quigley (Head, England Illegal Money Lending Team): The only assumption we can make is that if credit does dry up for somebody, there is the potential for people to seek out loan sharks. It is very difficult for us to say whether or not we are going to be able to identify a specific upsurge because we have no baseline. I suppose some people would say it is a political answer, but it is actually true. It is very difficult if you have no baseline to say whether you are increasing or decreasing. What I would say is that our experience has shown previously that if there is no credit available - shall we say - on an estate, loan sharks tend to wriggle their way in there and trade without any sort of competition.

Stephen Knight AM: In terms of the baseline, when you gave us survey figures earlier from 2006 and 2010, they are four years apart and obviously we are now four years on from the 2010 figures. Is there any intention, do you know, for a survey to be done at 2014?

Tony Quigley (Head, England Illegal Money Lending Team): The surveys were done previously through the Department for Business, Innovation & Skills (BIS) using policies and so the surveys were done from there. I cannot answer that. It was not a survey that we instructed. It was more a Government policy at the time looking into that particular area.

Stephen Knight AM: We need to check with BIS whether there is a 2014 survey update.

Jenny Jones AM (Chair): Indeed, an update, yes.

Stephen Knight AM: Nobody really knows, I suppose is the answer, what the outcome will be. Is anybody gearing up to either increase resources around tackling illegal moneylending or alternatively to increase resources for debt advice?

Tony Quigley (Head, England Illegal Money Lending Team): One of things I can say is that we have certainly from the last three months been in very close contact and negotiation with the Financial Conduct Authority (FCA) around this particular subject. I know they are intending to monitor the situation very closely through intelligence. We are very much intelligence-led as well. We know that over the last three years that the number of contacts into the team has been reasonably constant. We average roughly about 650 calls a year to the team. From our perspective, if we do start seeing a massive rise, I know the FCA will want to be notified immediately and I will be the first one to go round there with cap in hand to see whether or not we can increase resource.

Stephen Knight AM: Presumably you work very closely with the police in terms of prosecution.

Tony Quigley (Head, England Illegal Money Lending Team): We actually have two seconded officers on the team.

Stephen Knight AM: Do you get the resources you need from the police?

Tony Quigley (Head, England Illegal Money Lending Team): Yes. What tends to happen is that if you have officers within the team, the networks are very strong, but also the police do see this as one of the social ills and we are seeing some connection with organised crime groups. They are very keen to see that being challenged. We have done a big piece of work with Manchester through Operation Challenger and one of the things that Manchester wanted us to become involved with - and we are now very much embedded in Operation Challenger - is to try to remove the gangs from communities. We know certainly some of the gangs that are operating are operating illegal moneylending businesses. We have seen some great success there.

We have just done some recent work - I cannot talk about it at the moment because it is not for the public right now - but we have done some work in London recently. We have had some reasonable successes there as well. We are seeing a big partnership agreement between the police and ourselves and it is starting to bear fruit.

Sheila Lahey (Fair Trading Officer, LB Enfield): Just to give you the Enfield experience, we target various communities and locations and we have an information stall up which promotes the helpline and the credit union and CAB. It is very much about partnership working. From January 2015, in connection with the changes to payday lending, we are going to attend monthly surgeries in the targeted areas with advice and promotion and signposting to those three organisations.

Just to pick up the point that Tony [Quigley] mentioned about working with the police, we currently have a session of advocacy training for our officers. We have a borough commander who is very proactive and supportive of that and, as I speak, they are being trained on how to recognise potential illegal moneylending particularly with gangs. As you know, Enfield, particularly Edmonton, has a real problem with gangs. It is one of the highest. It is a very unpleasant statistic. It is getting agencies and partners to recognise that there may be other activity other than just the immediate antisocial behaviour stuff.

Stephen Knight AM: I hope you will report back to us in due course about what experience you have in the new year.

Sheila Lahey (Fair Trading Officer, LB Enfield): I can say that when we held an information stand at Edmonton Green, we tailored our own bespoke cards around National Consumer Week. The theme was about rogue traders and was really focusing on doorstep crime, but we kind of hijacked it a bit and tweaked it and therefore it was to be a good neighbour. We focused on doorstep crime but we also focused on illegal moneylending with the numbers of the helpline, the CAB and the credit union. Those cards were flying off the table because people said, “I know somebody who needs that advice”. As Tony [Quigley] said, we do not know whether they are going to go away and phone the helpline because it is not something that is quantifiable, but the fact there was that interest suggests we have to keep this process up.

Stephen Knight AM: Is there anything you think ought to be done? What is the brake on doing more to tackle illegal lending? Is it resources? Is it something else? Is there a role for the Mayor?

Tony Quigley (Head, England Illegal Money Lending Team): It is always resources, but from our perspective one of things is about raising the profile all the time. It is key to keep the profile going. Local authorities in Enfield have been a great advocate - and in Lambeth - in terms of what we have been doing. We sign up a charter which is where we get partner agencies together within the area. We all agree to do something about illegal lending in the area, whatever that may be, that the organisation can do. For example, if it is the CAB, some of the CABs have agreed just to ask people outright whether or not they are using loan sharks and to pass that information to us, sometimes anonymously. Sometimes even potentially they will get the victim and that is what people are.

Stephen Knight AM: Would it be helpful if the Mayor were to launch a campaign against illegal lending and a protocol with local debt advice organisations?

Jenny Jones AM (Chair): Even just to talk about it.

Tony Quigley (Head, England Illegal Money Lending Team): Absolutely; anything that the Mayor can do in terms of delivering the message. The other thing is the lesson plans; there has been good take-up with the lesson plans. As I have said, they are not something that as an enforcement officer I would try to impose on schools. These are lesson plans that have been developed by teachers for teachers. They do hit the right mark and it would be useful to see whether or not there is some further publicity we can do around those. One thing we have to do is clearly we have to tackle the loan sharks at the moment. Clearly we have to tackle the criminality and we are seeing organised criminals involved as well as local criminals that do this. We have to really challenge the next generation that actually this is not acceptable.

One of the key things we utilise and use is the example of seatbelts. Back in the 1980s, nobody wore a seatbelt. There was a massive campaign about making it socially unacceptable that people should start using them and that campaign has continued and continued and now the first thing the next generation does when they get in the car is put their seatbelts on. That is what we have to really work on is the next generation that actually move away from this, who have to have it now and who use loan sharks to do it.

Jenny Jones AM (Chair): Thank you. That was very interesting information for us.