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How to spot a Loan Shark

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According to The Daily Express, two loan sharks are being arrested each week as rapid inflation and cost-of-living increases have forced more than one million people to turn to loan sharks for money. These loan sharks are charging rates of interest that are extortionate – in some cases reaching 130,000%. As a credit union that charges commercially competitive rates, run by its members to serve its members. We are appalled by this trend and thought that it would be useful to share some thoughts on how to spot a loan shark.

Illegal money lenders will often present themselves as friends, and if you keep them on-side things will stay that way – but you’ll still be paying far more than you have to for the money you borrow.

Things can get much worse when you’re unable to keep up with your payments, with many experiencing harassment or intimidation as a result of not keeping up with payments, or pressure to keep on lending to pay your loan off, resulting in a spiral of debt that is impossible to repay.

So, how do you avoid falling foul of illegal money lenders?

Only borrow from a registered lender

The most important point is this: you should only borrow money from an entity registered with the Financial Conduct Authority (FCA). You can visit the FCA website at

www.fca.org.uk to determine if an organization or entity is an authorized lender. If they aren’t registered with the FCA, don’t borrow money from them!

Know the law

Illegal money lenders operate outside of the law, but it’s important to remember that if you’ve borrowed money from an illegal lender you haven’t broken the law yourself. Although loan sharks can try to intimidate you into feeling complicit in their lawbreaking, you won’t be prosecuted.

Telltale signs to keep an eye out for so that you can avoid loan sharks.

FCA regulation – for someone to lend money they must be authorised by the FCA, and if they aren’t then it’s illegal, and a massive red flag!

  1. Cash or bank transfer loans – are the favoured modes of operation for loan sharks and you’re unlikely to be offered these types of loans by licensed lenders.
  2. Paperwork – loan sharks avoid providing paperwork, this is so that there is less evidence about what has happened and also allows loan sharks too.
  3. Avoid giving you information about your loan – if you’re struggling to get clear details about your loan, interest, repayments and loan balance be aware, that this is a common tactic of loan sharks.
  4. Your loan keeps getting bigger – some loan sharks add charges of interest to your loan even as you’re making repayments, this is a particularly dangerous situation as you could spiral into debt.
  5. Withholding possessions as collateral – never give someone offering you a loan things like your passport or bank cards as security, a reputable lender would never ask you for these things.
  6. Intimidation or threats of violence – many loan sharks use violence and intimidation to scare their victims.

Report illegal lenders

If you think that you’ve come into contact with an illegal money lender, or even worse you’ve fallen prey to one it’s essential to report them as quickly as possible – they’ll never stop chasing you for money.

If you’re in immediate danger then you should call 999, alternatively, you can report them to the Stop Loan Sharks team by calling 0300 555 2222 or visiting the Stop Loan Sharks website (www.stoploansharks.co.uk).

Let’s all work together to be on the lookout for loan sharks. And let’s help direct our friends and neighbours to reputable, FCA-registered institutions for their loan needs.