When a mother of two, pseudonymously referred to as Sarah, found herself in dire financial straits, she turned to a family friend for help. Trusting him implicitly, she accepted a loan. Unbeknownst to her, this ‘friend’ was an unlicensed lender, more commonly known as a loan shark. Over time, Sarah received £3,000 from him, but repaid £5,000. This man, now serving jail time, was lending illicitly to approximately 100 other individuals.
The England Illegal Money Lending Team (IMLT), a body responsible for prosecuting unauthorised lenders, drew attention to an alarming trend, revealing a first-time instance in their history. Amid the current living cost crisis, more people are relying on loan sharks to fund their basic needs such as food and energy, while previously the loans were mainly towards larger utilities or emergencies like new appliances or vehicular repairs.
Reinforcing the dangers of borrowing from unregulated sources, Jackie Colebourne of Clevr Money warned against the practice, especially with the added financial burden brought about by the festive season. She urged: “Do not borrow money from anyone who is not registered, even if you think they might be your friend. Just don’t.”
Cath Wohlers, operations manager of IMLT, disclosed the upsetting reality of illegal borrowing on BBC Radio 4’s Money Box programme: “For the first time in 20 years we’re actually seeing people who are borrowing for food and fuel from illegal money lenders.”
She warned that the current socioeconomic climate, where many people’s expenditures surpass their income, was a breeding ground for loan shark activities. Those with bad credit scores, often denied assistance from conventional sources like banks, find themselves falling prey to such predators.
Sarah’s misfortune paints a vivid picture of the ordeal. Seeking financial assistance for her children’s Christmas gifts, she considered the loan shark a friend. He was a lifelong acquaintance, trusted by her and her family. But the ‘friendly’ transactions turned into a decade-long debt spiral. An IMLT investigation later discovered that she had paid back almost £5,000 against a loan amount of £3,000.
Elaborating on the issue, Wohlers revealed that victims often took an average of three years to report their loan sharks, mainly due to a lack of awareness of the IMLT and its function. She encouraged individuals to approach the IMLT for assistance, assuring them of the team’s commitment to raising awareness and providing help.
The credit union Clevr Money, where Colebourne works as operations manager, has also seen a surge in loan requests. Beyond facilitating loans, they aim to guide clients towards financial stability.
If targeted by an illicit lender, potential victims are urged to contact IMLT, reinforcing the need for ongoing vigilance against unauthorised lenders and potential loan sharks.
