Lending Responsibly – Dealing with Loan Sharks
4th February 2022 12:00:00am
This past week in Middlesbrough, two suspected loan sharks were arrested on suspicion of illegal money lending and money laundering offences. Warrants were executed as part of a collaboration between the England Illegal Money Lending Team, Cleveland Police, and Middlesbrough Council Trading Standards.
Loan sharks are unlicensed illegal moneylenders who charge very high interest rates on their loans and often use intimidation, threats and violence to ensure their loan is repaid. Loan sharking in Britain is an ongoing issue that continues to impact the lives of thousands of people around the country.
Often, people who turn to loan sharks feel as if they have no other options. They may not qualify for a traditional loan and are prepared to do anything to get enough money to pay utility bills or rent. Loan sharks may appear as a friend or guardian angel, who promises to help alleviate your troubles, but quickly turn sour when collecting their debt. In fact, 66% of those affected by loan sharks believed at one time that the shark was their friend.
In many cases, when the debtor cannot repay an initial loan to a loan shark, they are coerced into taking out a second loan with an extortionate interest rate, sinking deeper and deeper into debt. In extreme cases, debtors have taken their own life when faced with inflated repayments and threatening usurers.
Spotting a loan shark
As noted above, loan sharks can sometimes be trusted figures who are difficult to spot. However, there are often tell-tale signs that will inform you as to whether a potential money lender has ulterior motives.
All loan sharks are unlicensed lenders, who aim to shirk the interest and repayment regulations faced by legitimate lenders. They therefore will not appear on the Financial Services Register. You should always check the firms or person you are dealing with appears on this register. If not, they are working without a license and may be loan sharks.
Loan sharks will rarely offer the correct paperwork and are unlikely to provide you with receipts or proof of payments. Make sure any potential money lender can provide these. Similarly, a loan shark may increase or amend your debt without your permission.
They may refuse to give information about your loan, from the interest rate to the amount you owe. Often, they may make it impossible for you to settle your debt to retain their power over you.
Dealing with a loan shark
If you fear you may have already gone into business with a loan shark, some actions can be put into place to rectify things. Crucially, you must remember that you have not broken the law, and you have done nothing illegal. The legal fault lies with the loan shark, who will be dealt with accordingly.
Help is available to you – you can contact the Illegal Money Lending Team via live chat or 24/7 telephone. To speak to a team member on the phone, call 0300 555 2222, or head to www.stoploansharks.co.uk to use live chat.
When you report the loan shark, you will be contacted by a member of the team who will listen to your situation, and detail the options available to you. You can also anonymously report loan sharks directly to Gov.uk here.
We realise that reporting a loan shark can be a daunting task, but reporting these people helps keep our communities safer, and prevents others from befalling a similar fate.
Remember – if you know or are dealing with a loan shark, it does not mean you have broken the law.
Many people turn to loan sharks when they are rejected from a conventional loan as a result of a poor credit score. However, credit unions like Moneywise may be able to offer a greater level of flexibility when issuing credit to its members.
As a not-for-profit organisation, we are here to help those in the local community achieve financial security through savings services and ethical low-cost loans, including options such as our Family Loan which does not require a credit check.
The head of England’s Illegal Money Lending Team, Tony Quigley, said: “We are determined to warn residents about the dangers of loan sharks, and we will work with partners to take action against them.
“Loan sharks are criminals that prey on the most vulnerable people in our communities. They trap their victims into spiralling debt and will often use intimidation and violence.
“We will not tolerate these activities in Middlesbrough and would urge anyone with information about loan sharks to report them as soon as possible.
“Anyone who needs to borrow money from a safe and responsible lender should contact Moneywise’s South Tees Community Bank on Linthorpe Road.”