Borrowing money can take many forms, for example a credit card, an overdraft, a loan, a car finance agreement or a mortgage, and most of us will borrow money at some point in our lives.
This resource is designed to help you spot a money lender that is operating illegally, and to know what to do if you have borrowed money from an illegal lender. This is especially important if you have experienced economic abuse. You may be struggling to make ends meet and in a vulnerable economic position.
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Many people who have experienced economic abuse will have borrowed money. You may have been forced to do so by the abuser, the abuser may have borrowed money in your name without your knowledge, or you may have had no choice but to borrow money to cover the cost of day-to-day essentials or to pay back other debts the abuser has left you with.
Economic abuse can force you into a situation where you feel you have no choice but to borrow from an illegal lender. The abuser’s behaviour may have left you with a poor credit rating, making it difficult for you to borrow from a legal lender. Or an illegal lender may have offered you a loan that at first seems attractive and later proves dangerous.
There are some key signs to look out for that may help you identify an illegal lender, and there are steps you can take for support if you think you have borrowed from a lender that is operating illegally.
‘Loan shark’ is a common term used to describe illegal lenders. It is estimated that more than 300,000 people are in debt to illegal money lenders in the UK.1
Anyone charging interest on money loaned without proper authorisation from the Financial Conduct Authority (FCA) may be acting illegally.
Illegal lenders cannot be trusted and borrowing from them may mean trouble for you. They’re often friendly at first, but that is unlikely to last and can often lead to threatening or violent behaviour.
There is no one way to be sure that a money lender is operating illegally, however, if you can answer ‘yes’ to one or more of these questions, you might be borrowing from a loan shark:
People borrowing from a loan shark may borrow relatively small sums that can turn into a debt of many thousands of pounds with no clarity on when the loan might be repaid. Borrowers may be subjected to threats, intimidation and/or violence to themselves or to their families.
Borrowers may also be forced to commit crimes when they cannot afford to repay their loan and debt to legal companies may spiral out of control, putting tenancies and some of the key pillars of normal life at risk.
If you believe you have come across an illegal money lender, you can report them to the Illegal Money Lending Team via this safe and confidential online form. A member of the team will contact you at a time that suits you to talk confidentially about the lender, and will explain how to get the support you need. All conversations are kept in confidence.
If you think you’re in danger right now or are being threatened by a loan shark, consider going to the police – even if a loan shark has threatened you with the police themselves. Authorised lenders do not threaten to use the police to collect a debt.
Remember – you are not in trouble and have done nothing wrong; they are the ones committing the crime and the loan is legally unenforceable.
Alternatively, if you are struggling to escape a loan shark, get help from your local Illegal Money Lending Team. Talking to someone who understands what you are going through can really help. Your local team will be able to help and support you, and investigate your situation more fully.
England
Illegal Money Lending Team
Northern Ireland
Scotland
Wales
In almost all cases, a lender has to be authorised by the Financial Conduct Authority (FCA) to lend money in the UK. The FCA makes sure that authorised firms are lending responsibly, ensuring that consumers are protected.
You can check to see if your lender is fully authorised by the FCA by searching the FCA register or on the Loan Smart website. If you can’t find the lender you are looking for, you should contact the FCA to check if the lender is authorised.
If you are in debt caused by economic abuse, whether to a legal or illegal money lender, you are not alone. Help is available.
Before taking any action to tackle your debts, it is important to speak to a qualified debt adviser. If you are confident to do so, it will help to explain that you are a victim of economic abuse. This will help them take your safety into account when advising you on the best way to deal with your debts.
A qualified debt adviser can outline the options you may have for dealing with your debts and help you to make any important financial decisions. They can support you to contact creditors and may be able to negotiate with them your behalf. They will also be able to discuss other debt solutions with you, including ways of clearing or managing your debts.
There are a number of organisations that you can contact for support, information and advice.
Last updated July 2021
If you are experiencing economic abuse, you are not alone. We have more information that can support you to take steps towards safety and begin to regain control of your finances.
1. Interim evaluation of the national illegal money lending projects –summary. Report prepared by POLICIS for the Department for Business, Innovation and Skills, October 2010.
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