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Denis Goldring and Sandra Hudson
Caught in the debt trap

Britain now leads Europe in the credit stakes. Over 8 million people in this country cannot get loans from the traditional high street banks and building societies because they have a bad credit rating. Panorama has been finding out where they get their money.

A whole new industry is growing out of what is now called the sub-prime lending market. The loans can be easy to get, but the rates are much higher.

Sub-prime lenders specialise in giving credit to people that the high street (or prime) lenders won't touch. They have either missed payments or their income is too low.

BBC TV's Panorama programme finds many people struggling to survive under a barrage of high-interest loans and hard sell techniques.

Denis Goldring and his partner Sandra Hudson live with their five children in Sheffield. Both are unemployed and money is tight. They receive 225 per week in benefits.

They'll come out and put cash on the table or they'll show us catalogues

Denis Goldring
The family has several loans with four different lenders. A third of their income, 90 a week, goes on paying off debts to door-to-door lenders. It is hard for them to resist the offers of easy credit.

Denis says "They'll come out and put cash on the table or they'll show us catalogues. Sometimes they've asked us to go out and look in a van and pick what you want and we'll sort it out for you".


Another Sheffield couple, Gary and Beverley Queenan, have also fallen foul of the door-to-door moneylenders and other creditors. They owe 15,000, a debt so severe that their debt worker advised them to apply for bankruptcy.

Gary Queenan says "every week you've got three or four different collectors coming to the door... you're paying them that money because you're stood on the door and you're missing other important bills that do need paying."

In their attempts to pay of the loans, the Queenans have stopped paying their council rent. The local authority was threatening them with eviction.

Gary and Beverley Queenan
The Queenan's owe 15,000
These families are not alone. Three million people borrow from door-to-door lenders, most of them on low incomes and many on benefits.

Advice bureaus across the country are reporting huge increases in the number of people coming to them with serious debt problems. Debt advisors are concerned that this has been caused by changes to the Government's Social Fund.

Russell Cavanagh
Russell Cavanagh is concerned about people on low incomes
Russell Cavanagh of the Sheffield Debt Line says, "The Social Fund no longer caters for essential items. It's very much more stringent. It is very easy to get credit from doorstep collectors who are very seductive in their selling approach."

But the practice of giving loans at much higher levels of interest, is allowed to continue. Experts say there is insufficient legislation to protect people from the moneylenders.

John Fox from Trading Standards says, "There's no criminal offence for lending at high rates and we can't take action on behalf of consumers because of the deficiencies in the law."

Out of date

John Fox from Trading Standards
John Fox says new legislation is needed
There have been calls for updating consumer protection for years. The Consumer Credit Act was drafted over 25 years ago when the credit market was very different.

The Act was designed to protect borrowers from unfair lending practices and extortionate lending deals. But it has proved to be ineffective.

The only sanction available to the Office of Fair Trading is to stop a company trading. They want interim powers to deliver more wide-ranging penalties, which could include fines.

In 1987 Panorama investigated the burden of borrowing. Tony Blair, then an opposition spokesman, said tougher laws were needed.

He said, "You need some measure of control and regulation to make sure that the unscrupulous are not lending to the desperate when there is no possibility of repayment."

In 1999 the Government produced a consumer White Paper. Despite this and the many calls for the Government to act, the bill was dropped from the Queen's Speech.

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