Personal Finance: Loan Shark Curbs May Still Not Stop Debts Crisis

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This week's Consumer Credit White Paper means that a British government is tackling the criminal underbelly of the loans industry for the first time for more than 30 years, writes John Cranage. Proposals include sending teams of 'loan shark hunters' into deprived communities in cities such as Birmingham and Glasgow.

They will tackle gangs of criminals who lend people more than they can afford, charge massive rates of interest and use violence to extort repayments.

Other measures include forcing lenders to make the small print on their documents more legible and ensure that annual percentage rates are prominently displayed to make it easier to compare terms.

But, as West Midland investment adviser Philippa Gee points out, this may not be enough to stop some consumers from getting to deep financial water without a lifebelt.

'When people are desperate, the small print, whether shown prominently or not, isn't the major issue,' she said.

'There are times when people find themselves in such difficult situations that their only concern at that point is to secure borrowing, regardless of the terms that might apply.

'For the more sophisticated investor, being able to repay borrowings without severe penalties is a useful financial planning tool and is one to be welcomed.

'We would have liked to have seen more done to discourage debt black holes and would have preferred the introduction of CAT standard loans to mirror mortgages and savings, so it is easy to pick out the cleanest contracts.'

For those seeking to improve their finances, Philippa, who works as finance director at Wolverhampton independent financial adviser Torquil Clark, has the following ten tips for saving money.

1 Analyse Spending If you list all your outgoings, whether they go out automati-cally every month or not, you may be surprised and this could identify a few areas where you can reduce the money you spend. Also check your direct debit and standing order lists as you may find that some old payment which should have stopped, are still going out.

2 Telephones Whether you use a mobile or landline, there are always special offers to be had, so you donot need to stay loyal to current provider. If you use a landline look for a package that takes into account the number of calls you make and where to. If you are a mobile user look at whether you use it more for texting or phoning and get a package that reflects that.

3 Cash Accounts Don't think that just because you have some spare money in your ordinary bank or building society account, that you are doing well, as you will probably only be earning 0-1 per cent a year.

Move the sum to a high interest account and you could quadruple the interest. …