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Combatting Loan Sharks and Illegal Money Lending in the UK

Learn about loan sharks, their illegal practices, enforcement efforts, and the impact on victims and communities in the UK.

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Combatting Loan Sharks and Illegal Money Lending in the UK

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  1. What is a Loan Shark? • A loan shark is someone who lends money without the correct permissions under Section 19 and 23 of the Financial Service and Markets Act • These licences are issued by Financial Conduct Authority • It is a criminal offence and carries a maximum sentence of two years in prison.

  2. England Illegal Money Lending Team • Hosted by Birmingham City Council • Employs 70 members of staff • Two distinct functions Investigators and LIAISE Officers • Agile workers across England • Trading Standards team with embedded Police

  3. Addressing the issues • Using the full weight of the legislation available: • Financial Services Marketing Act 2000. • Proceeds of Crime Act 2002. • Theft Act 1968 –Demanding money with menaces / Blackmail. • Injunctions and anti social behaviour Orders.

  4. IMLT achievements to date • Taken over 329 prosecutions • Assisted over 25,000 victims • Written off over £64 million of illegal debts (money victims would have paid back to illegal lenders if the Department had not acted) • Trained over 24,000 front line staff to spot the signs of illegal lenders • Secured prison sentencing totalling over 214years for illegal money lending and associated crimes (plus Indeterminate Sentence for Public Protection)

  5. PN & TR • Found guilty of 20 offences including Blackmail & Rape • Links to Prostitution, steroids & drugs • Sexually assaulted his victims & one customer committed suicide • Between June 2007 and March 2008 he collected over £648,000 • On Police radar, difficult to prosecute • 1 million POCA jointly with Cheshire Police • Sentenced to IPP (will serve a min. 7 years) partner given 4 years

  6. SDL • Charged with 16 counts of IML • Loaned money to fellow foster parents • Operated from her home in Manchester for more than 7 years • Over £300,000 in cash, cheques and bank transfers flooded into her account • One victim ended up paying back around £125,000 over a period of seven years, after borrowing around £30,000. • Given 3 years in prison • Judge Rudland said “You advanced loans with no assessment as to whether people could pay. The victims had no idea of their indebtedness to you. They saw you as a life long friend but you were ready to exploit them while benefiting yourself

  7. Who is affected? • Estimated 310,000 UK households using illegal money lending • This equates to 12% of households in the most deprived areas • Convert households to people and that is about 732,000 men, women and children living in the shadow of loan sharks • People repay £700 million per year to loan sharks

  8. Typical characteristics • No credit agreements given – “you owe me this much today” • No receipts for payment or payment books • Violence, intimidation or threats if repayments are missed • Loans to young people (under 18’s) • Can take illegal securities e.g. cash card • Never advertise – find clients by word of mouth. • Personality changes when victim can no longer meet payments • Could implicate relatives if borrower disappears

  9. How do they work? • Operate in a community to a cohort of people • Seem like a friend, helping out in a crisis • Payments are mainly in cash, Loan Shark maintains own records • Often work alone until business grows or need support with intimidation • They might take securities, belongings • May suggest crime, prostitution or ‘tasking’

  10. July 2014 National Campaign • Shelter • Crisis • Financial Inclusion and PRS – Claire Whyley • Foyer Federation • Locally, good success with YMCA and Hostels

  11. July 2014 Darlington • National Awareness Campaign across the Private Rented Sector. • Training delivered to multi-agencies. • Leaflet drop 1200 properties - Northgate • Article in Darlington Echo • Radio Star interview

  12. What we know • 3.6 million households living in private rented sector • People seeking help from the local authority as homeless were due to PRS tenancies ending • Single people find it more difficult to get help in social housing as they are low-priority • Most move into PRS as the local authority unable to help or they felt they had no other choice • Those unable to afford home ownership & unable to access social housing

  13. Why people move into PRS • Housing related crisis event – loss of accommodation due to overcrowding, condition being unfit for human habitation. • Personal traumatic event or critical incident – a one-off event, job loss, debt, mental health problems. • Ongoing need – something personal, relationship breakdown, continued substance mis-use , prison, domestic violence

  14. What do they need? • Barriers for PRS – not having a rent deposit or landlords not accepting benefits or bond schemes • Lack of furnished homes or white goods – people can not budget on food, difficulty managing finances going without basics such as heating • People found it hard to say PRS property was their home due to fear of landlords raising the rent or evicting them

  15. The relevance to the IMLT? • Untapped – we have fantastic relationships with RSLs and Council teams • We don’t know what we don’t know • We have victims who used a Loan Shark for the deposit for PRS • Our victims are hidden enough, but in PRS are possibly unaware of the help and support available to them from local agencies (and us)

  16. Ask …. • Who’s the friend? Victims don’t call the illegal lender a Loan Shark, they call them ‘mate, pal, friend, guy down the pub, lady at school gates……’

  17. Threats “If you grass me up, I’ll kill you” NOT TRUE – out of all the witnesses we’ve supported – ZERO% have had any physical harm after we’ve got involved 2. Retribution “If I’m in prison my mates can still get to you” DOESN’T HAPPEN - The IMLT stay in contact with all our witnesses, risk assess any new situations and react quickly 3. Promises “If you report me, nothing will be done” WRONG - The IMLT have a 100% prosecution success rate! Witness Support…Loan sharks sometimes over-estimate their own importance…

  18. Any questions?

  19. Contact details • Denise Meek • 07557 203 148 • denise.meek@birmingham.gov.uk • LIAISE Officer in the North East • 0300 555 2222 is the Stop Loan Sharks hotline, open 24 hours a day, seven days a week.

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