Money Wellness
An elderly woman opens her door to a loan shark
category iconcost of living
calendar icon28 Jun 2023

Cost-of-living crisis sees loan sharks thrive

Loan sharks are profiting from the cost-of-living crisis by taking advantage of people struggling to cope with rising prices, according to a new TV investigation.

Tonight’s Newsnight highlights the dangers of turning to unlicensed money lenders, who are charging monthly interest rates of up to 50%.

You can watch the full report on BBC Two at 10:30pm.

What is a loan shark?

It’s illegal to lend money for profit without a consumer credit licence. Someone who does this is known as a loan shark.

How to spot a loan shark?

Loan sharks generally operate door to door. But not all doorstep lending is illegal. There are legitimate companies, such as Provident. Loan sharks may imitate these lenders to try and win your trust.

At first, loan sharks will usually be friendly and appear sympathetic to your problems. Again, this is a tactic to gain your trust and make you more likely to borrow from them.

Signs that you may be dealing with a loan shark include:

  • you’re not given any paperwork or much information about the loan (although they may give you something to sign to try and convince you they’re legitimate)
  • they take items as security e.g. your mobile phone or bank card
  • they take your belongings if you don’t pay on time
  • they keep adding interest and charges, so the amount you owe never goes down
  • they use intimidation or violence

The Financial Conduct Authority can tell you if a business is licensed to lend. You can call them on 0800 111 6768.

What you should do if you’ve borrowed from a loan shark

You’ve not broken the law. It’s illegal to lend money without a licence, so the loan shark has broken the law. But you haven’t and you won’t get in trouble with the police.

You don’t have to pay the money back as it was lent illegally. But, if you’re worried about your safety, don’t just stop making payments. Get advice first.

There are specialist illegal money lending teams who can advise you if you’ve borrowed money from a loan shark.

You can report a loan shark online or you can call the illegal money lending team for your country:

England – 0300 555 2222

Wales – 0300 123 3311

Scotland – 0141 2876 655

Alternatives to loan sharks

You may feel like you have no option but to borrow from a loan shark because you’re on a low income or have a poor credit score. But there are safer alternatives:

  • Credit unions – they offer manageable credit and consider applications from people with poor credit scores.
  • Employer lending schemes – your employer may be able to offer short-term help e.g. an advance on your wages. Talk to the HR department.
  • Try our free benefits calculator – make sure you’re claiming all the financial support you’re entitled to.

If you’re struggling to cover all your living expenses, you may benefit from debt advice. Whether you need help with budgeting or you want to find out about formal debt solutions, we can help.

Avatar of Rebecca Routledge

Rebecca Routledge

A qualified journalist for over 15 years with a background in financial services. Rebecca is Money Wellness’s consumer champion, helping you improve your financial wellbeing by providing information on everything from income maximisation to budgeting and saving tips.

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