Borrowing money should always be safe, legal and fair – but sadly illegal lenders, often known as ‘loan sharks’, still operate in communities across the UK. According to a CSJ report, over a million people in England are in debt to illegal and unregulated money lenders – 700,000 more than the last official estimate in 2010.
Illegal lenders (individuals and/or groups) lend money without the correct authorisation and often use intimidation and threats to recover their loans. These loans are often subject to extremely inflated rates of interest, making them almost impossible to pay back – leaving the borrower stuck in a never-ending cycle of debt.
Knowing how to spot a loan shark, and what to do if you, or someone you know is affected, can help to keep you and others safe.
What is a loan shark?
A loan shark is anyone who lends money without being authorised by the Financial Conduct Authority (FCA). They often appear friendly and helpful at first, but their behaviour can quickly turn threatening. Loan sharks tend to operate outside the legal system, meaning borrowers have little to no protection.
Signs you may be dealing with a loan shark
Loan sharks can sometimes be hard to spot at first. They rarely advertise openly, often operate by word of mouth, and may even be someone you would consider a friend. Here are some of the key warning signs:
- No credit checks or paperwork: if the lender doesn’t carry out proper affordability checks or provide a formal loan agreement, it’s a red flag.
- Cash-in-hand loans: Many loan sharks hand over money in cash, making it hard to keep track of repayments.
- High interest and/or unclear terms: Loan sharks often charge extortionate interest rates and can change the amount you owe without warning.
- Threats or violence: They may use intimidation, threats, or even physical harm to collect payments.
- Confiscating valuables: Some loan sharks may take bank cards, passports, or other possessions as ‘security’ for a loan.
Why it’s dangerous
Borrowing from a loan shark is not only illegal – it can also trap you in a cycle of debt. Because they operate outside the law, you have no legal protection and may end up paying back many times the original amount. Missed payments can lead to threats, harassment, or worse.
Of those supported by the Illegal Money Lending Team in 2024, more than half had believed the lender was their friend at the point of borrowing. It was only when the payment amounts requested increased, or the borrower got into financial difficulty that the mask slipped.
What you can do
If you suspect someone is a loan shark, or if you are affected, it’s important to act safely and seek help:
- Check the lender’s status: Visit the FCA register to see if the lender is authorised.
- Contact the Illegal Money Lending Team (IMLT): You can report a loan shark anonymously by calling 0300 555 2222, texting ‘LOAN SHARK’ to 60003, or visiting stoploansharks.co.uk
- Don’t stop repayments without advice: Whilst loan sharks have no legal right to enforce debt, it’s best to get advice before stopping payments to avoid escalation.
- Speak to a debt advisor: Charities like StepChange or CAP can offer free, confidential help and support.
No one should feel forced to turn to an illegal lender. If you’re in financial difficulty, there is always help available through legal, regulated channels. Spreading awareness and knowing the signs of loan shark activity can protect not only yourself, but your wider community. If in doubt, always check – and never feel alone in reaching out for support.
