How to spot and report a loan shark
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.
Loan sharks often take other illegal action to collect the money they've lent you, such as threatening violence or taking away your credit cards or valuables. In extreme cases, they've been known to force non-payers into prostitution and drug dealing.
Not all lending needs to be authorised by the FCA - for example, informal, one-off loans between friends or family aren’t against the law. Even if a loan is informal, anyone who lends you money can’t do anything illegal when they collect it, such as harassing you.
Signs to look out for to spot a loan shark
The person wants interest but gives you no paperwork
Loan paperwork should include:
The overall cost of the loan
A complaints procedure
Ombudsman details
They refuse to give you information about the loan
This includes:
Any interest
When they want to be paid back
What happens if you do not pay on time
They want to keep something of yours until the debt is paid
Things like:
Your mobile phone
Passport
Cash card
They take things from you if you do not pay on time
They keep adding interest or charges so the debt never goes down
They can scare you or be violent when you do not pay
Check if a lender is authorised
If you borrowed money from someone who isn't FCA authorised, you haven’t broken the law, they have.
You can find out whether a money lender is authorised by checking the register on the FCA website at www.fca.org.uk.
What to do if you’re in debt to a loan shark
They may try to scare you but loan shark debt is not your fault. It’s important to remember that you have done nothing wrong - the loan shark is the person who has committed a criminal offence. You can report a loan shark to the Illegal Money Lending Team and get advice by calling 0300 555 2222 or visiting www.stoploansharks.co.uk.