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Illegal 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 DTI 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". 

The report 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

Illegal Lending Enforcement Pilot Project

DTI has invested £2.6 million over two and a half years in the project, and has secured a further £1.2m from the Financial Inclusion Fund to continue the pilot in 2007/8 and expand it to cover Liverpool, Leeds and Sheffield. HM Treasury also recently announced that the project is to be rolled out nationwide. Further details are on the Enforcement Project page.