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Illegal money lenders, or loan sharks, are a problem across the country. Loan sharks are not a community service and should never be used under any circumstances.

There are other affordable credit options available to you if you need to borrow money, even if you have been turned down for credit or a loan in the past.

What is a Loan Shark?

A money lender has to be authorised by the Financial Conduct Authority (FCA) to lend money legally. Money lenders who aren’t authorised by the FCA are breaking the law. They are known as loan sharks.

Loan sharks often work from home, charge very high rates of interest and don’t give you much paperwork to confirm the arrangements they’ve made with you. A loan shark usually has lots of customers and lends money like a business, but their lending is illegal.

Licensed moneylenders are regulated by the Office of Fair Trading (OFT). Unlicensed loan sharks work outside of the law. If you have borrowed from a loan shark you have not broken the law, they have. Licensed money lenders are regulated by The Financial Conduct Authority.

If you borrow from a loan shark it’s likely you will:

  • get a loan on very bad terms
  • pay an extortionate rate of interest
  • be harassed if you get behind with your repayments
  • be pressured into borrowing more from them to repay one debt with another

How to spot a loan shark

A loan shark

  • may appear to be your friend at first offering to lend you money
  • rarely offer paperwork you don’t really know how much you owe
  • charge very high interest rates
  • add additional amounts to the debt so you struggle to pay
  • take items as security such as passports and bank cards
  • resort to extreme methods to reclaim their debts such as threats, intimidation or violence

How do I know if a money lender is unlicensed?

You can check the Financial Services Register online to see if a lender is licensed. This lists all approved lenders and financial services.  It is free to get basic information from the register, including trading names and the activities for which a business is licensed.

If a lender doesn’t have a current licence, don’t borrow money from them.

What if I have borrowed money from a loan shark?

If you have already borrowed money from a loan shark you are under no legal obligation to repay the debt. Loan sharks sometimes frighten people by saying they’ll be prosecuted and even sent to prison if they don’t pay up, but it is the lender who has committed a crime, not you. You can report the loan shark confidentially to the STOP LOAN SHARKS team.

How to report a loan shark

In England, if you think a money lender is operating without being FCA authorised, you can speak in confidence to the Illegal Money Lending Hotline on 0300 555 2222. You can also email the Illegal Money Lending Team at [email protected] or text loan shark and your message to 60003.

They have a free and confidential hotline open 24 hours a day 7 days a week .


Other Helpful Links:

What to do if you owe money to a loan shark.

Updated 27/08/2021