Under the Consumer Credit Act, lenders making loans to individuals up to the value of £45,000 must be licensed. It's a criminal offence for them to carry on their business if they're not. There are a few exceptions such as local authorities. Also, lenders making loans of less than £60 don't, at present, need a licence, though the government is reviewing this. Other people and businesses, involved in lending, such as credit brokers, debt collectors, credit reference agencies and debt counsellors must also be licensed at present, though the government has proposed that in future they might not have to be.

Licences are issued by the Office of Fair Trading and, in theory, they should be granted only to fit and proper concerns. In practice, the OFT doesn't have the resources to check applicants thoroughly and only 898 licences have been refused or subsequently revoked over the last ten years out of some 218,000 applications.

Local Trading Standards Departments are responsible for monitoring the licence holders and making sure that they are complying with the Consumer Credit Act.

But there are lenders who flout the law and get away with it. The situation is made worse because people who are in debt to these lenders are often unwilling to give evidence against them - usually because they fear the lender will tell their family or employer about the debts or the lender has made other threats.

If you come across a money lender who's trading without a licence, inform your local Trading Standards Department or Consumer Protection Department - if you look under that entry in the phone book you'll be redirected to your appropriate local authority entry which will give the address and phone number of the Department.

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Getting Into Debt

Always keep a check on your borrowing and on your changing circumstances. If you start to get into difficulties with your borrowing, act fast it's easier to solve a small debt problem than a larger one. Here are some guidelines on what - and what not - to do.

Tell lenders what's happening

Don't just miss payments. Many lenders will try to sort out a new arrangement to help you over a temporary crisis - for example, you might be able to make just interest-only payments on your mortgage, or spread your borrowing over a slightly longer period.

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Getting Into Debt

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