The helpline will be available to people in Yorkshire, Humberside and Central England, as well as those in the South East and North West. Run by a team of workers from Birmingham City Council, it is hoped it will help vulnerable people who have been targeted by unscrupulous loan sharks.

Commenting on the initiative, Gareth Thomas said, “It takes a real low life to prey on vulnerable people and bully and intimidate them out of their hard-earned money.

”This team is having great success cracking down on these criminals and supporting their victims.

”I want to encourage anyone who has been affected by a loan shark to use the new helpline and come forward in confidence. Any information, however small, on loan shark activities will help the team to take action.”

A loan shark is a business offering loans without a licence from the Office of Fair Trading. If you worry that you might have been targeted by a loan shark, the Loan Shark Project will be able to help you.

Yet, according to Swiss insurance giant Zurich, relatively few UK consumers have ever consulted an independent financial advisor. Research by the insurance company reveals that only 57% of all over-eighteens in Britain claim to have visited an independent expert to receive financial advice.

Tony Solomon, director of life marketing with Zurich, comments, “The decision to seek financial guidance is a step in the right direction towards setting up a long-term plan to survive the credit crunch and prepare financially for their old-age.”

A good financial advisor is able to offer guidance on most important money decisions, including mortgages, pensions, investments and secured loans.

 Payday loans are short-term loans taken out by consumers to cover cash shortfalls, usually in the days before they are due to receive their monthly salary. However, they come at a price, with a typical £100 loan costing around £25, even if it is paid back at the earliest time possible.  

The annual percentage rate (APR) of these loans is even more crippling, with one well-known lender admitting that their APR works out at around 1355%, a figure which is reasonably representative of the APRs offered by their UK competitors. Such punitive interest rates compare unfavourably with those offered by credit cards, secured loans, homeowner loans and most overdraft facilities.  

Chris Tapp, of debt charity Credit Action, commented, “Over the past year, payday loans have become an issue in the UK, and the growth in people who have problems who have such a loan has been notable in the last six months.”

The secured loans company, which employs around 70 staff at its Cardiff office, was formed seven years ago, assisted by the capital of prominent Monaco-based venture capitalist Marc Bertola.  

Now Bertola has been bought out, marking an important development in the life of the secured loans company, which used to employ just three staff but now has a workforce of 70 operating from a high-tech purpose-built office.

Richard Brown, Chief Executive of moneynet.co.uk, an online secured loan provider, advised debtor students that they should seek to prioritise repayment of credit card debts over the student loans they have incurred.

He said, “You have a very long window to repay student debt - nobody is saying that you should be cavalier about this as some people graduate with substantial student debt but it is a fact of life unfortunately, whereas carrying big wads of debt on a high interest credit card isn't.”

One debt students are unlikely to have, except perhaps mature age students who have taken out a homeowner loan in order to fund their further education, is any form of secured loan.

In a surprising contrast, 61 percent of consumers said they would visit a pound shop to find the cheapest possible product, yet only eight percent said they would scout the market for the best deal on things like car and secured homeowner loans.

The Lloyds TSB survey participants gave various reasons for their reluctance to shop around when making important financial decisions such as choosing a homeowner loan.

Some cited scepticism as a factor, saying that they believed shopping around was unlikely to provide them with a cheaper product.

Others said that looking around was too much trouble, clearly indicating that, for some, second-best is good enough.

However, a spokesperson from Lloyds TSB warned that by taking this approach, many UK consumers are losing out. She said, “By watching the pennies it’s easy to lose sight of the pounds.

“Being careful with your spending is wise but to really boost your bank balance you should take a long hard look at the financial products you have.”

The news follows an earlier announcement to the stock exchange that the secured loan player had posted a pre-tax loss of £8.4 million for the financial year ending in March.

This loss marks a dramatic turn of fortune for the broker, who reported a £7.8 million profit for the same period the following year.

It has been a busy and difficult fiscal twelve months for the company, perhaps most notably because of their decision to sell their Individual Voluntary Arrangement business and instead focus on secured loans.

This decision to drop the IVA side of their operations has had an inevitable impact for staff of the Bolton-based company, with 115 job losses, including 10 forced redundancies, resulting.

The secured loan broker’s chairman commented that its financial year had been “extremely disappointing”. Adding that, “Whilst current trading for Loanmakers is challenging, the board believe business still has the potential to deliver good growth and accordingly has been examining ways to strengthen the company’s balance sheet.

“We are well aware that shareholder confidence is at a low level but in order to deliver value in the future the board’s strategy is to support the Loanmakers business until confidence returns to the market.”

Eighty-five jobs are believed to have been lost at the Newport-based loan provider as a result.

While some have speculated that this move can be seen as a reflection of an increasingly troubled UK economy, others believe the reasons for the job losses may be more complex.

Only two months ago, a study by Nielsen Media Research showed that Picture Financial had made astonishing cuts in its advertising spend, falling from £4.8 million to just £306 in the first quarter of 2008.

A visit to the secured loans company’s internet homepage reveals that they are still available to deal with the loans of existing customers. However, a statement outlining their current stance on new customers reads:  “In response to current economic conditions, Picture is taking the opportunity to re-shape its products to ensure that we continue to maintain the highest levels of competitiveness and service.

“To allow us to focus on this process we are currently not taking new business but hope to be back very soon helping our customers to significantly reduce their monthly credit repayments, so please visit our site again soon.”

Based in Sunderland, CitiFinancial offered secured loans to consumers on the UK market and employed some 600 workers, with around 400 of those based in its Sunderland office.  

Much of this is attributable to the fact that CitiGroup have been hit hard by losses in the US sub-prime lending market, making a loss of £2.7 billion in the first quarter of this year.  

Bert Pijls, business manager for CitiGroup’s UK consumer business commented, “Following a strategic review of the consumer business in the UK, Future Mortgages and CitiFinancial were not identified as areas for strategic growth.  

“By proposing to focus resource on our Citi and Egg brands, we are reflecting Citi's global strategy and creating a platform for expansion in the UK personal finance market.  

“We are committed to ensuring that staff who are potentially impacted by these proposals are treated fairly and made aware of all the options open to them.”

CitiFinancial had around 66,000 secured loan and homeowner loan customers. The loans of these customers will now be managed elsewhere within its business operations.

Three positions on the board are open. One position will go to a candidate from a small firm, one to a candidate from a medium firm and one to a candidate from a large firm. This split exists so as to ensure a fair and balanced reflection of the loans market.

In order to be eligible for election, candidates must receive two nominations from other AFB members and complete a nomination form.

Both Paul Carley, who currently represents small firms, and Steve Feeney, who currently represents medium firms, are standing for re-election.

Robert Sinclair, director of the AFB comments, “We are an open and transparent body, which is fully representative of its members and their interests, and we welcome all nominations to the Board.
 
“These are challenging times for the industry and the wider economy and it is more important than ever that the industry has a strong trade body representing its interests with regulators, politicians and the media.

“However, we are only as strong as our members make us. That is why it is vital we have engaged members who are willing to serve on the Board. The secured loans industry faces a number of key challenges this year and sitting on the AFB Board offers a great opportunity to influence the future shape of our industry.”

To nominate someone from the homeowner loan and secured loan industry, find out more from the Association of Finance Brokers.