According to new research released by the Centre for Social Justice (CSJ), more than one million people are currently borrowing money from illegal loan sharks. And this number may well be rising.
For those of you who might be unfamiliar, a loan shark is someone who lends money without authorisation from the Financial Conduct Authority (FCA).
They often tend to appear friendly and helpful, but quickly trap their victims into a vicious cycle of spiralling debts…
Families are under increasing financial pressure as the cost of living continues to rise. When people need money fast, they may find themselves considering the option of borrowing from a loan shark as a quick fix solution. We spoke to one victim, a mother of two, to learn more about the devasting effect illegal money lending had on her family.
Kim, now 41, and her then-partner, took out four loans with a woman they knew and gave half of their earnings to her every month.
The couple said the loan shark was a woman who had previously worked for a legitimate lender and posed as their friend.
She said: “We trusted her. We thought she was operating legally, and she told us we were ‘good payers’. She used to come and sit in our house and fuss over my children.
“She told us about her family and her holidays. We were friendly. We’d known her for some time.”
For an initial loan of £750, Kim was paying back £400 interest. The pressure deepened when the lender asked when her payday was and harassed her until each payment was made.
Kim said: “She was messaging me constantly and I felt I was being hounded. I’d asked her if I could miss one month but the messages she was sending back were that I had to pay. There was no choice.
“I thought, ‘this isn’t right.’ I contacted Citizens Advice to find out what my rights were, and it became clear I wasn’t dealing with a legitimate lender.”
Kim’s case was referred to the IMLT who took action against the loan shark and provided her with valuable support.
The number of people taking out loans with illegal money lenders is increasing, and the stories behind each person are shocking. Kim was just one of many who has been ripped off and taken advantage of by a loan shark who preyed on her desperation.
The England Illegal Money Lending Team (IMLT) is a dedicated team of specialists that are leading the fight against loan sharks. They have helped thousands of people escape the clutches of these criminals and wiped out nearly £90 million worth of illegal debt.
What to be aware of
If you’re in the unfortunate position of being in debt to a loan shark, please know that you’re not alone and there is help out there.
Loan sharks have been known to use violent tactics including assault, blackmail and even kidnapping to pressure victims into repaying loans with extortionate interest fees.
The CSJ report, Swimming with Sharks, found that some predatory lenders are demanding sexual favours as repayment from borrowers.
One victim, Anna, 38, told investigators: “I’m scared of what he can do. I had to sleep with him because I couldn’t afford the payments. I feel unclean… I knew it was wrong, but he took a photo of my daughter coming out of school and sent it to me saying: ‘We now know what she looks like.’”
Warning signs to indicate that you could be dealing with a loan shark include giving no paperwork upon the agreement of a loan, refusing to give detailed information about a loan, intimidation and threats, and taking items such as a bank card or passport until the debt is paid, and taking things from you if you do not pay on time.
How you can help fight back against loan sharks
The Stop Loan Sharks Community Fund has been made available to local residents, charities, community and voluntary groups, schools and statutory agencies, from which they can apply for grants of up to £5,000 to pay for activities that highlight the dangers of loan sharks.
The money has been seized from convicted loan sharks through the Proceeds of Crime Act (POCA) and used to fund good causes nationally.
People can find out more about the grants at www.stoploansharks.co.uk/poca-funding
The IMLT provide a confidential helpline service for people affected by illegal lending, as well as information and guidance on how to spot the signs and report the crime.
If you are concerned about the activities of an illegal money lender and would like more information, support and advice, please call the Stop Loan Sharks 24 Hour Helpline on 0300 555 2222 or visit www.stoploansharks.co.uk. Live chat is available on the website between 9am and 5pm, Monday to Friday.
If you need to borrow money, credit unions are a safe ethical option. They’re local, friendly and not-for-profit. Find out more about the services on offer locally at www.findyourcreditunion.co.uk
Money Masterclass: loans sharks & illegal lending
Find out more about the dangers of loan sharks, how to spot the warning signs and how you can protect yourself in our latest Money Gym Masterclass.Watch the recording