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Illegal Money Lending

Consumers who find themselves excluded from credit channels due to a poor credit history, an inability to manage finances or because their income is simply too low to provide reassurance, may resort to illegal money-lenders.

Illegal money lenders, who are unlicensed (lending without a credit licence) and operate outside the law, are commonly referred to as loan sharks. These loan sharks not only take advantage of vulnerable borrowers but also bring disrepute to legitimate lenders.

Research report: The scope and extent of illegal lending in the UK - November 2006

The Department commissioned a research report into the scope and extent of illegal money lending in the UK following a commitment made in the Consumer Credit White Paper, "Fair, Clear and Competitive - The Consumer Credit Market in the 21st Century" (PDF, 1115KB). 

The research report (PDF, 904KB) maps the scope and extent of illegal money lending, indicating the areas affected and the numbers of people involved. It also covers the different types of illegal lenders ("loan sharks") and their impact, and it explores why consumers use illegal lenders.

The report shows that loan sharks victims appear to fall into two broad camps:

  • The credit impaired (about a third of victims), who have “chaotic lifestyles” typically associated with drug or alcohol abuse, but who may occasionally be in work. This category have typically worked their way down the “credit ladder” until a loan shark is the only person who will lend to them.

  • The credit excluded (two thirds of victims) are those who are unable to access mainstream credit for a variety of reasons – often simply because they live in high-rise estates where home collected credit agents will not tread. This group are typically on benefits – single mothers, the disabled, and are among the most vulnerable in our society.

Illegal Lending Project

Since 2004 the Government has committed £16.5 million to fund the establishment of regional teams successfully targeting illegal money lending operations. Further details are on the Project page

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