Lenders to help pay for battle against illegal loan sharks

Illegal lenders make life a misery for hard-up folk. Now mainstream lenders will help fund the fight against them

High cost lenders will face a new levy to fund a crackdown on illegal loan sharks, the Chancellor has announced.

The Bank of England and Financial Services Bill will be amended to give the City Watchdog powers to impose the levy.

It will consult on which consumer credit companies will be hit by the levy, but it is likely to include payday lenders and credit card companies.

The revenue raised will be used to fund the work of illegal money lending enforcement teams across the UK from 2017/18. The teams are currently funded by the government which in 2015-16 paid £3.6m towards running the enforcement operation. Last year its work resulted in 108 arrests and charges against 43 people.

"I am absolutely determined to protect customers from abuse and sharp practice in the consumer credit market," Chancellor George Osborne said.

" That is why I capped the total cost of a payday loan and it's why we're taking further action today to tackle illegal loan sharks by ensuring that enforcement teams have the funding, from the industry, they need to protect consumers from those that would do them harm."

The Financial Conduct Authority took over the regulation of consumer credit providers in 2014 and introduced tough new rules which forced many payday lenders out of business. It will administer the new levy from 2017-18.

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