Councils are stepping in to help families as fears rise over the use of loan sharks in the recession.

Trading standards teams have uncovered cases of assault, blackmail, threats, sexual intimidation and kidnapping by loan sharks circling around some of the most vulnerable members of society.

Cllr Neil Eustace, Chair of the Public Protection Committee at Birmingham City Council, said:

'As the recession bites and the supply of credit dries up, we fear it is possible that more loan sharks will start to circle around vulnerable people who are short of cash. Our officers will be doing their utmost to help people access legitimate services and avoid using the 'services' of a loan shark. A debt owed to a loan shark is not a legal one - the lender is breaking the law. Trading standards investigators will not hesitate to prosecute loan sharks preying on victims of the economic downturn.'

The Birmingham team was set up as a pilot in 2004 to cover the West Midlands area, alongside a sister pilot in Glasgow. It proved so successful that further government funding was provided to extend the team’s service to cover the north west, south east and east of England regions along with Yorkshire and Humber.

Examples of councils taking action to beat the loan sharks include:

• Torbay Council has invested £35,000 into a credit union bank so those in need can apply for low-cost loans rather than being tempted by loan sharks
• Birmingham City Council’s illegal money lending team has helped more than 6,000 victims, written off more than £7million of illegal debt and secured more than 40 years in prison sentences for offenders.
• Salford City Council sent warnings about the activities of loan sharks to 80,000 residents with their council tax bills, and has also secured more than 40 years in prison sentences for loan shark activity
  A credit union backed by Hammersmith and Fulham Council has granted more than 50 loans worth more than £30,000
  
  Cllr Margaret Eaton, Chairman of the Local Government Association, said:
  
  The recession is placing more financial pressure on families and making it harder for many to make ends meet. People who may have lost their jobs, have outstanding debts or are struggling to raise credit through normal channels can become desperate and take cash from a loan shark. There is a real danger that these parasites could profit from the desperation of others.
  
  'Loan sharks are often involved in a wider web of illegal or dangerous activity and will stop at nothing to get what they want. Councils have come across shocking cases of assault, blackmail and sexual intimidation. With the help of local people, we can ensure the loan sharks are properly investigated and brought before the courts.
  
  'It is vital that people struggling with their finances realise that there are alternatives to the loan sharks circling around them. From setting up credit unions to offering debt advice, councils are offering a range of vital services to help people through the recession.'