Archived decisions

Hampshire County Council

Executive Member for Policy & Resources Item 5

7 December 2007

Illegal Money Lending, Legal Authorisations

Report of the Director of Property, Business and Regulatory Services

Contact: Nigel Snape Tel: 01962 833690 e-mail: [email protected]

1

Introduction

1.1

This report seeks approval to delegate to Birmingham City Council and the officers of its Illegal Money Lending Team the investigation of and institution of proceedings against illegal money lenders operating within Hampshire, in accordance with Section 101 of the Local Government Act 1972.

2

Recommendations

1 That Birmingham City Council and the Illegal Money Lending Team be authorised to investigate and institute proceedings against illegal moneylenders operating in Hampshire.

2 That a Protocol be entered into with Birmingham City Council in accordance with Section 101 of the Local Government Act 1972 and other enabling powers delegating powers and duties concurrent with Hampshire County Council's powers and duties in respect of the enforcement of Part III of the Consumer Credit Act 1974, subject to the terms and conditions contained within the agreed Protocol.

3 That the Head of Regulatory Services be authorised to determine the terms of any such Protocol; to enter into it on behalf of Hampshire County Council; to terminate it; and, subject to the agreement of the Executive Member for Policy and Resources, to extend it.

4 That the "Protocol for Illegal Money Lending Team Investigations" set out in Appendix 1 is approved and authority is delegated to the Head of Regulatory Services to approve minor alterations as required to ensure agreement.

2

Background

2.1

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. The Office of Fair Trading 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.

2.2

To operate a consumer credit business without being licensed is a criminal offence. The maximum penalty in the Magistrates' Court is a fine of £5,000 but if it is tried on indictment in the Crown Court there is a maximum penalty of an unlimited fine and/or two years imprisonment. Further, the Office of Fair Trading has power to compulsorily vary a license and after issuing a `minded to revoke notice', can revoke licences where it can be established that the licensee has acted inappropriately. From April 2008 the OFT will have new powers to impose requirements on licenses where necessary.

2.3

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).

2.4

The Illegal Money Lending Team was established in the Midlands as a pilot project, one of only two in Great Britain; the other pilot area being Glasgow. The remit of the team 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.

2.5

The pilot scheme in England is hosted by Birmingham City Council Trading Standards Service and covers a geographical area including the West Midlands, Warwickshire, Shropshire, Herefordshire, Worcestershire, Stoke, Staffordshire and Telford. The team initially consisted of seven investigators with a broad range of backgrounds and investigative skills and a team manager.

2.7

In Southern England a regional fund has been allocated for a further Illegal Money Lending project to cover the cities of Portsmouth, Southampton and Hastings. These cities have been highlighted as having areas of high financial exclusion, which research shows can give rise to illegal money activities.

2.8

In order to expand the scheme into Portsmouth and Southampton and appropriate neighbouring areas, utilising the current infrastructure of the existing Birmingham 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 Birmingham City Council. Although the Illegal Money Lending team will primarily target areas within the two cities, it is inevitable that the activities of the illegal money lenders will be carry over across the borders surrounding the two cities into the jurisdiction of Hampshire County Council, including Havant and Gosport. The attached protocol at Appendix 1 contains all the required conditions and consents to enable Birmingham City Council officers to undertake the necessary investigations and legal procedures.

3

Financial Implications

3.1

There are no financial implications for Hampshire County Council as a result of this proposal. The Treasury will fund all costs.

3.2

By supplementing Trading Standards resources at no extra cost to Hampshire County Council, our performance in relation to enforcement of the provisions of the Consumer Credit Act 1974 is increased.

4.

Performance against the Objectives of the West Midlands Pilot Project

4.1

Objective 1 - "To obtain a clear understanding of the scale and impact of illegal money lending as well as learning lessons on the best way to enforce":

4.1.1

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 England due to the health and safety risks for their collectors.

4.1.2

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.

4.1.3

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 moneylenders 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.

4.1.4

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

4.1.5

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.

4.1.6

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.

4.2

Objective 2 - "To create a climate where victims can come forward - confident that prosecutions will be undertaken, and convictions obtained, without fear of reprisals":

4.2.1

Effective branding and publicity of the pilot project has meant extensive promotion of the aims of the project and work of the team, within both the local and wider community. Evidence suggests that this has been achieved because it can be evidenced that victims are willing to contact the hotlines, and to provide further evidence to help achieve prosecutions.

4.2.2

The Birmingham Team has continued to use 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.

4.3

Objective 3 - "To change the perception amongst those lending that illegal money lending is rarely prosecuted":

4.3.1

A proactive media campaign is ongoing. Engaging television, radio and newspapers locally, regionally and nationally is helping to promote the work of the team and raising public awareness.

4.4

Objective 4 - "To develop ways of replacing the removed lenders with more support for their victims":

4.4.1

The Birmingham Illegal Money Lending Team helps victims of illegal moneylenders with practical help and support through and in conjunction with the services of local Debt Advice Teams and the National Debtline. 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.

4.4.2

Links have also been established with credit unions and their associations and where practicable these agencies are also called upon to provide help and advice. The Birmingham Illegal Money Lending Team offers money management to all victims of moneylenders who contact them for advice and assistance. Partnership working is recognised as being a must in this area of service provision.

4.5

Key outcomes from West Midlands Pilot include:

      · Illegal Debt Written off - over £2million

      · Victims helped - over 1,500

      · Cash seized to date - £44,170

      · Proceeds of Crime Proceedings ongoing for over £1 million, £62,000 so far confiscated

      · 14 fire arms seized and taken off the street

      · Many of the offenders were also falsely claiming benefits.

      · Total Imprisonment so far 26 years, incorporating 16 years in prison sentences for illegal money lending and associated crime plus 10 years I prison sentences for possession of fire arms

      · Many offenders falsely claiming benefits

      · 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 and disorder.

5

Legal Issues

5.1

Section 101 of the Local Government Act 1972 and the Regulation 4 of the Local Authorities (Arrangements for the Discharge of Functions) (England) Regulations 2000 enables the delegation of this function to another local authority , in this case Birmingham City Council and Regulation 4 permits the Executive Member to approve such delegation.

LINK(S) TO CORPORATE STRATEGY

Yes

No

Hampshire safer and more secure for all

_

Maximising well-being

_

Enhancing our quality of place

_

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1 Published works

2 Documents which disclose exempt or confidential information as defined in the Act

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                      Appendix 1

Department for Business, Enterprise and Regulatory Reform

ILLEGAL MONEY LENDING PROJECT

PROTOCOL FOR ILLEGAL MONEY LENDING TEAM INVESTIGATIONS

Interpretation

"Delegated Power"

The discharge of the concurrent function of the Enforcement of Part III of the Consumer Credit Act 1974 delegated to Birmingham City Council by Hampshire County Council in pursuance of section 101 of the Local Government Act 1972, Regulation 7 of the Local Authorities (Arrangements for Discharge of Functions) (England) Regulations 2000, section 13(7) of the Local Government Act 2000 and any other legislation enabling this discharge.

"Commencement Date"

The date the Delegated Power is granted.

"Hampshire County Council Trading Standards"

The Trading Standards Service of Property, Business and Regulatory Services of Hampshire County Council.

"Birmingham Trading Standards"

Regulatory Services of Birmingham City Council

"Hampshire County Council Contact Officer"

The person appointed by the Head of Regulatory Services of Hampshire County Council in accordance with paragraph 4.1 to liaise with the Illegal Money Lending Team manager on matters relating to and in connection with the Illegal Money Lending Project.

"Birmingham City Council Contact Officer"

Birmingham City Council's Illegal Money Lending Team Manager.

"BCC Appropriate Contact Officer"

The Director of Regulatory Services, Head of Trading Standards and Licensing of Birmingham City Council or any person authorised by him.

"HCC Appropriate Contact Officer"

The Head of Regulatory Services of Hampshire County Council or any person authorised by him.

"Term" means the period commencing on the Commencement Date and terminating on 31st March 2009 unless extended in writing by the parties.

1 Application

1.1 This Protocol applies to the performance of functions by Birmingham City Council in connection with the Department for Business, Enterprise and Regulatory Reform and HM Treasury funded `Illegal Money Lending Project' and covers the following:

    · The conduct of investigations and associated working practices for the Illegal Money Lending Team officers when conducting investigations or operating within the jurisdiction of Hampshire County Council.

    · The mechanisms whereby Hampshire County Council Trading Standards Service is updated on the progress of the project and any significant issue relating thereto.

    · The exchange of intelligence and information between the Illegal Money Lending Team and Hampshire County Council Trading Standards Service

    · The institution of legal proceedings.

2 Protocol

2.1 The purpose of this protocol is to facilitate the delegation of powers to officers employed within Birmingham City Council 's Illegal Money Lending Team to enforce the provisions of the Consumer Credit Act 1974 within the jurisdiction of Hampshire County Council Trading Standards Service. The protocol encourages the exchange of information and a working partnership approach between Birmingham City Council and Hampshire County Council Trading Standards Service in relation to the Consumer Credit Act 1974.

2.2 This Protocol will come into force on the Commencement Date and terminates at the end of the Term.

2.3 Notwithstanding the terms and conditions of this Protocol, this Protocol does not prejudice the right of Hampshire County Council Head of Regulatory Services to withdraw the Delegated Power at any time during the Term. However, Hampshire County Council 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 Hampshire County Council.

3 The Illegal Money Lending Team

3.1 It is recognised that officers in the Illegal Money Lending Team 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 Birmingham City Council boundaries. The Delegated Power is deemed to provide such authority.

3.2 The Illegal Money Lending Team will comprise of a team manager and up to 20 staff directly employed by Birmingham City Council. The Illegal Money Lending Team manager will be responsible for the day-to-day operation and supervision of the Illegal Money Lending Team.

3.3 The Illegal Money Lending Team manager will report directly to the Director of Regulatory Services, Birmingham City Council as appropriate.

3.4 The Illegal Money Lending Team Manager Birmingham City Council will quarterly from the Commencement Date, provide a progress report on relevant investigations within Hampshire, giving details of investigations (unless there is a significant risk that any such disclosure may jeopardise an investigation, such a decision is within the discretion of the Director of Regulatory Services) prosecutions being pursued or concluded and developments concerning or affecting the Illegal Money Lending Project to the Head of Regulatory Services of Hampshire County Council and Trading Standards South East

3.5 It is recognised that after Delegated Power is granted to Birmingham City Council, all decisions concerning the pursuance of relevant investigations, decisions to prosecute and the laying of charges and/or information on such relevant matters within the jurisdiction of Hampshire County Council, shall be taken by Birmingham City Council and in accordance with the relevant Code for Crown Prosecutors and Birmingham City Council 's Enforcement Policy. However, Birmingham City Council will consult with the Hampshire County Council Appropriate Contact Officer before any charges and/or informations are preferred unless it is not practicable to do so. In circumstances where consultation is not practicable, Birmingham City Council will consult with the HCC Appropriate Contact Officer at the earliest reasonable opportunity on the charges to be pursued.

4 Working Arrangements in the Hampshire County Council Area

4.1 Hampshire County Council Head of Regulatory Services will designate and appoint a Contact Officer, and a deputy Contact Officer.

4.2 The Illegal Money Lending Team manager will at monthly intervals and at any time the Illegal Money Lending Team manager considers necessary and prudent, or at the request of Hampshire County Council's Contact Officer, brief the Contact Officer (or deputy Contact Officer, where appropriate and necessary) on any intelligence gathered, any progress made on investigations and prosecutions pending or otherwise, relating to or affecting Hampshire County Council and its residents or Hampshire County Council Trading Standards Service.

4.3 Further to Clause 4.2 above, all reasonable steps will be taken by the Illegal Money Lending Team manager to keep the Hampshire County Council Contact Officer updated on the progress of investigations and enquiries being carried out in Hampshire and any changes made or introduced by the Department for Business, Enterprise and Regulatory Reform (Department of Trade & Industry) concerning the `Illegal Money Lending Project'. It is incumbent on the Illegal Money Lending Team manager to maintain regular dialogue and communication with the Hampshire County Council Contact Officer (or where appropriate and necessary the deputy Contact Officer).

4.4 The Illegal Money Lending Team will have regular contact with Hampshire Constabulary and other Government agencies. The Illegal Money Lending Team manager will consult the Hampshire County Council Contact Officer (or if appropriate and necessary the deputy Contact Officer) to identify any local arrangements, investigations and protocols before any investigation is commenced in pursuance of the `Illegal Money Lending Project'. Wherever possible, the Illegal Money Lending Team manager will actively involve the Contact Officer (or if appropriate and necessary the deputy Contact Officer) and seek to develop close links between those agencies and Hampshire County Council Trading Standards Service.

4.5 The Illegal Money Lending Team manager will as soon as reasonably practicably inform Hampshire County Council's Contact Officer (or if appropriate and necessary the deputy Contact Officer) the outcome of any concluded prosecution proceedings conducted within Hampshire.

4.6 Birmingham City Council will consult with Hampshire County Council Trading Standards Service and Hampshire County Council Corporate Communications in good time before issuing any press release concerning any prosecution pursued by Birmingham City Council pursuant to this Protocol.

4.7 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 Hampshire County Council's Contact Officer in advance. Upon being notified of an intention to contact such a body, Hampshire County Council Trading Standards may arrange for one of their own officers to accompany the relevant officer of the Illegal Money Lending Team on any visit, or undertake the work themselves, and pass any results back to the Illegal Money Lending Team.

4.8 Where the Illegal Money Lending Team manager and the Hampshire County Council Head of Regulatory Services agree that an officer or officers of Hampshire County Council Trading Standards will be actively involved in an investigation, that officer will remain an employee of Hampshire County Council Trading Standards Service but for the purpose of that investigation, will come under the control of the Illegal Money Lending Team manager. Such agreement will be subject to the Illegal Money Lending Team manager being satisfied that the officer's or officers' participation will not compromise any investigation or endanger any member of the Illegal Money Lending Team, supporting staff or witnesses, that the officer has the appropriate training and experience to undertake the task; and upon any other terms that the Illegal Money Lending Team manager and the Hampshire County Council Head of Regulatory Services consider necessary or appropriate.

4.9 Unless there is prior agreement with the Illegal Money Lending Team manager for assistance in an investigation, which is accompanied by an official purchase order from Birmingham City Council, no reimbursement will be made for time spent on activities supporting the `Illegal Money Lending Project' or expenditure incurred by any Hampshire County Council Trading Standards Service officer.

4.10 Birmingham City Council shall designate a BCC Appropriate Contact Officer.

4.11 In the absence of the Illegal Money Lending Team manager, the role, duties, and responsibilities of the Illegal Money Lending Team manager shall be discharged and carried out by the Appropriate Contact Officer.

5 Referral of Information and Intelligence to the Project Team

5.1 It is recognised that the Illegal Money Lending Team will rely on receiving information about Illegal Money Lender activities.

5.2 Hampshire County Council Trading Standards Service will endeavour to provide as much relevant information and intelligence as reasonably and practicably possible to the Illegal Money Lending Team concerning any investigation being carried out within the jurisdiction of Hampshire County Council, having regard to any statutory limitations or restrictions, the time likely to be expended, resources available and costs likely to be incurred by Hampshire County Council Trading Standards Service in providing the same.

5.3 The Hampshire County Council Contact Officer will provide information and intelligence to the Illegal Money Lending Team manager or a person designated by them.

5.4 The Illegal Money Lending Team will investigate individual complaints received concerning alleged Illegal Money Lender activities. Such complaints may be used by the Illegal Money Lending Team as a source of intelligence.

5.5 Birmingham City Council, Illegal Money Lending Team and Hampshire County Council Trading Standards Service agree to process personal data only in accordance with the requirements of the Data Protection Act 1998 and to disclose information only 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 Illegal Money Lending Team within the jurisdiction Hampshire County Council will be the responsibility of Birmingham City Council. Investigations will be undertaken in line with the Birmingham City Council's published Enforcement Policy and subject to the policies and procedures approved and adopted by Birmingham Trading Standards.

6.2 Birmingham City Council 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 Hampshire County Council will be responsible for any requests for information under the Data Protection Act 1998, the Freedom of Information Act 2000 and the Enterprise Act 2002 that are made to Hampshire County Council in relation to information held by Hampshire County Council. Hampshire County Council will consult with Birmingham City Council before releasing information relating to illegal money lending during the currency of this Protocol.

6.4 Birmingham City Council will be solely responsible for the Health and Safety of Illegal Money Lending Team officers and any other officer or person within the direct management of the Illegal Money Lending Team providing support and assistance in any investigation undertaken by the Illegal Money Lending Team.

6.5 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 Birmingham Trading Standards.

6.6 When the Team Manager, Illegal Money Lending Team Birmingham City Council, recommends a prosecution under Part III of the Consumer Credit Act 1974, if required, Hampshire County Council Trading Standards Service will be provided with a copy of the relevant prosecution file, which will consist of a detailed case summary, schedule of issues, aggravating and mitigating factors, reasons justifying prosecution and any other material fact that Hampshire County Council Trading Standards Service ought reasonably to be aware of. Hampshire County Council Trading Standards Service will be invited to communicate any comments it considers appropriate and necessary concerning the intended prosecution to the Director of Regulatory Services, the informant for Birmingham City Council. The informant for Birmingham City Council will give such comments due attention and consideration.

7 Responsibilities and Actions of the Authorities

7.1 Birmingham City Council shall be liable for the actions and competence of the persons employed within the Illegal Money Lending Team and shall ensure that the Illegal Money Lending Team 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 Hampshire County Council 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 or intelligence provided between Birmingham City Council and Hampshire County Council Trading Standards Service 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 or enquiry subject to this protocol.

7.4 Birmingham City Council and Hampshire County Council Trading Standards Service endorse a joined up working 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 Illegal Money Lending Team or Hampshire County Council Trading Standards Service from discharging their duties, as appropriate.

Commencement date:

Signed

Birmingham City Council

Head of Regulatory Services

Hampshire County Council