800,000 South Londoners ‘financially vulnerable’ as fears of loan sharks loom

More than 800,000 people living in South London have been deemed to be in “financially vulnerable circumstances,” as fears increase over a rise in loan shark lending.

Financial vulnerability means people may find it harder to access credit from mainstream lenders and turn to illegal money lenders instead, especially in the cost-of-living crisis.

More than three million people across the UK have borrowed from an illegal money lender in the past three years, according to a non-profit finance organisation Fair4All Finance.

An estimated 811,624, or 34 per cent, of residents in South London are in what Fair4All Finance defines as “financially vulnerable circumstances” – someone unable to absorb an unexpected cost.

The figure is above 20 per cent in all boroughs, and highest in Greenwich, at 51 per cent, and Lewisham, at 45 per cent.

Graham Seymour, 66, a retired security guard from Abbey Wood, and customer of “ethical lender” Fair for You, said: “My partner and I are both pensioners, and the cost of gas and electricity and food is just so high right now, so last winter for example we’d only be turning the heating on if our grandkids came over.

“Unfortunately we did use other loan companies that charged a really high interest and they just didn’t provide any flexibility, they didn’t care about your circumstances when you were paying back, and so they just end up messing up your credit score and then you can’t get credit elsewhere.

“A relative of mine did also use a loan shark once, and of course they just charge you so much interest that you’re never ever going to be able to pay it off – that situation turned a bit nasty, and so I’m very definite that I’m never going to go down that route because I know it doesn’t work.”

Charitable funder City Bridge Foundation has provided funding to three not-for-profit community lenders – Fair for You, Fair Finance and Salad Money – to enable them to lend up to £10million to between 10,000 and 13,000 Londoners over the next two years.

The loans prevent customers from having to pay over the odds for high-cost and payday loans – suffering the so-called “poverty premium,” as they incur higher costs than those with greater incomes – or even feeling they have no option but to turn to loan sharks.

One of the lenders, Fair Finance, helped Marcia Francis, who lives in Lambeth. She said: “I’ve got a few health issues which mean that I can’t work.

“In the past when I’ve needed some extra money to help out with something, like beds for my kids or household appliances, things I couldn’t go without, I’ve tried going to banks. But I’ve always been rejected, even though I do have regular benefits income and I’d have been able to pay back.

“Fair Finance has been able to give me loans, so I’ve been able to get a fridge and washing machine, and send some money to my sons in Jamaica – in one case helping my son with hospital bills after a violent attack. I really doubt if I could survive without Fair Finance. I don’t know what I’d have done.”

Paul Martinelli, City Bridge Foundation grants committee chairman, said: “In the current difficult economic climate, many people face a real struggle just to cover day-to-day costs, and one-off purchases like replacing a broken fridge can push them into the trap of high interest loans, or worse still, illegal lenders.”

(Picture: Pexels/Mikhail Nilov)