If you’re having difficulty paying your bills or covering other living costs, the temptation to turn to a loan shark may be tempting. Unfortunately, this could be an unwise move that could lead to deep debt.
There are a number of ways to protect yourself against illegal lenders and find legal, authorised options. You can check if a lender is licensed by the Financial Conduct Authority (FCA) using their online search facility.
What is a loan shark?
Loan sharks are unlicensed money lenders who charge exorbitant interest rates and sometimes use threats or violence to intimidate people into paying back their loan. This can have a severe impact on both your finances and mental wellbeing.
Loan sharks may also be involved in other criminal activities, such as drug dealing. Unfortunately, they often target those with low incomes or who find themselves facing difficult circumstances.
In the UK, all lenders must be licensed by the Financial Conduct Authority (FCA), meaning they must abide by certain rules and regulations.
These lenders must be listed on the Financial Services register, which you can check online.
If you believe a lender is breaking the law or doing something illegal, you can report them to Trading Standards. Debt charities also provide free advice and support through free advice services.
Loan sharks are individuals who lend money without an FCA licence. This practice is illegal and could prove disastrous if you’re vulnerable or have a poor credit history.
These lenders do not provide you with any paperwork, are unlikely to give you clear information about your loan and often resort to intimidation and violence if you miss payments or can’t repay the money. Furthermore, they take possessions as security for their loans such as passports and bank cards.
Many individuals who borrow money from unauthorised lenders end up owing thousands of pounds, making it difficult to move on with life.
If you’ve been victimised by a loan shark, reach out for assistance and support from the England Illegal Money Lending Team (IMLT). This team investigates and prosecutes loan sharks while offering aid to those affected by this type of lending. Their team consists of specialist investigators and victim support officers from diverse backgrounds such as trading standards, policing services and debt advice services.
Are loan sharks regulated?
Borrowing money legally is possible through secured credit cards and second-chance banking. Furthermore, you can get advice from Citizens Advice consumer service or Trading Standards about legal options for borrowing money.
Loan sharks are individuals or businesses who lend money at a high interest rate on short-term, small loans. Usually, these individuals target those in financial difficulty who require urgent cash.
They may use intimidation or violence to get you to pay back the money, so it is essential that you are aware of this possibility. The FCA keeps records of all authorised lenders, so if you’re worried about a lender, check if they are regulated by them before engaging in any dealings.
Some loan sharks may pose as payday or doorstep lenders, so be sure to confirm their legitimacy with the FCA before doing business with them. Otherwise, if there are problems, there won’t be anyone to turn to but yourself in case a complaint can be lodged against them.
Are loan sharks illegal?
Loan sharks are illegal lenders who charge high interest rates and use threats and intimidation to collect debts. If you feel that you have been victimised by these individuals, please report them to the police or Trading Standards immediately.
They typically provide smaller loans with high interest rates, and usually require repayment within a short timeframe. Furthermore, they may use violence to enforce repayment.
These predatory lenders are usually affiliated with organised crime gangs and can be found in underbanked areas, on the internet, and through personal networks.
Many individuals who become involved with loan sharks are vulnerable or unable to repay their debts on time, often due to other issues like addiction or mental health difficulties.
You can confirm if a lender is legally authorised to lend money by checking the Financial Services register. Alternatively, you can contact the Financial Conduct Authority if you are uncertain about a particular lender.