Illegal Money Lenders are never the answer
Illegal Money lending is often referred to as one of the world’s oldest professions. Even in the bible the narrative is told of Jesus cleansing the temple of money lenders.
However, the practice exists not only in the history books and biblical texts, but is a growing problem in modern day Britain; with it being believed that over 300,000 people across the UK are indebted to illegal money lenders at any one time.
There are now growing fears that increasingly, vulnerable consumers, particularly those struggling with debt repayments and those struggling with social security benefit sanctions, are being forced to turn to illegal money lenders again.
There are also fears that the recent clampdown by the Financial Conduct Authority on pay day lenders, by making them ensure their loans are affordable and by imposing interest rate caps on them, is having an unintended consequence of driving more vulnerable borrowers into the hands of illegal money lenders.
How do loan sharks prey on their victims?
The success of the loan sharks model is it operates a lifeline for people normally at their most vulnerable, only to then use that lifeline to ensnare them into a cycle of never-ending fear and debt repayments. Unlike legal lenders who want their debts repaid, illegal money lenders never want their debts repaid, and instead want their customer to provide them with an on-going source of income for years to come.
It is easy for people to become indebted to loan sharks. Often they are the friendly face in the pub, the woman who stays at the end of the street or the guy who comes to the gym on a Friday.
They understand the difficulties borrowers face and sympathise with them. They present themselves as wanting to help and offer to tide people over to their next pay day or benefit payment.
However, with horror stories like the 40 year old woman who borrowed £500 before Christmas and ended up repaying £88,000, no-one should be under any illusions: loan sharks are not just for Christmas. They normally will still be getting be getting paid when the festive period comes around again.
How do you know if someone is an illegal money lender?
Although it may seem unlikely, it is not always obvious someone is an illegal money lender. Usually people become aware of them by word of mouth, as someone who can help out.
An obvious sign, however, that the person you are borrowing money from is an illegal money lender is they will be known locally as someone that helps people out. You won’t be the only person that is borrowing from them, as there will be others as they rely heavily on word of mouth to attract new customers.
Illegal money lenders also do not operate shop fronts, although they often may operate other legitimate businesses from which they lend money. They also are not going to provide anyone with paperwork. The last thing they want to do is leave an evidential trail that could be used as evidence against them in future prosecutions. They also are not going to tell you how much you will repay in full, or even what the applicable interest rate is for their loans. Instead they are going to tell you how much you pay each week or month. `
They also never tell you how much you still owe, what the interest rate is, or allow you to settle your debts in full.
How do they collect money?
The other key element of identifying when someone is operating an illegal money lending business is how they collect the money. They normally will agree a time and a place for you to meet them each week, or they will come to your door to get the payment from you.
When you cannot make the payments, they will often take other items of value from your home, or take passports and driving licences as security, until they can get all their money. They also are not averse to using violence or the threat of it to drive people into desperation to find the money.
They are also known to co-opt their victims into committing other crimes on their behalf, such as transporting or selling illegal drugs.
What to do if you are borrowing from an illegal money lender?
The problem with illegal money lenders is few people want to admit to using them, because of the fear of reprisals. However, across the UK there are illegal money lending teams which specialise in providing support to people who have become the victims of illegal money lenders.
These teams, who speak to people on an anonymous basis, normally employ ex-police officers, debt advisers and trading standard officers and work closely with the police to carry out surveillance on the loan sharks. They then work to build up intelligence on those involved, with a view to initiating prosecutions against them.
The helpline numbers for these teams are:
- England Illegal Money Lending Team: 0300 555 2222
- Wales Illegal Money Lending Unit: 0300 123 3311
- Norther Ireland Trading Standards Consumer line: 0300 123 6262
- Scotland Illegal Money Lending Unit: 0800 074 0878
What to do if you are struggling with debt repayments?
If you are struggling with debt repayments, turning to illegal loan sharks is never the answer and will only make matters worse.
If you are no longer able to afford your monthly repayments to debts, the best answer is to seek advice and address your debts. There are several legal schemes available across the UK that can help people and are a safer option than turning to illegal money lenders. These include the Debt Arrangement Scheme and Protected Trust Deeds in Scotland, and Individual Voluntary Arrangements across the rest of the UK.
If you would like to speak to an adviser who can give you reliable, expert advice call us on 0808 156 7730.