The Centre for Social Justice’s (CSJ) new report, Swimming with Sharks: Tackling illegal money lending in England, estimates that up to one million people in England are borrowing from an illegal money lender today – that is, someone who lends money for profit without a licence from the Financial Conduct Authority.
In the first major study in a decade, CSJ has used the largest sample of confirmed victims to date as well as interviews with victims of illegal money lending to understand where illegal lending takes place, its typical forms, and the route taken by individuals to the most dangerous forms of indebtedness.
It found that illegal lending takes place across England. Since 2011, the Illegal Money Lending Team England have arrested 730 loan sharks across the nation who continue to stalk deprived estates and their local neighbourhoods advancing money to vulnerable victims whom they then exploit.
The nature of illegal money lending is changing with evidence that illegal lenders are increasingly using the fast evolving social media landscape to reach a wider pool of potential subjects. This allows them to intimidate their victims 24 hours a day.
Victims of illegal money lending are among some of the most vulnerable people in our society, blighted by multiple layers of disadvantage, including low incomes, unemployment, poor health and existing debts to legal creditors. Indeed, almost two thirds of victims (62%) in 2021 had an income of below £20,000 a year.
Matthew Greenwood, Acting Head of Debt, Centre for Social Justice, said:
“As the cost-of-living crisis sets in, we can expect more vulnerable people to fall foul of exploitative loan sharks. That is why we must head off this crisis before it gets worse. With the Government providing welcome recent commitments to address economic crime in our country, the time is now to renew the fight against illegal lenders.
“We propose a three-pronged attack: clamping down on illegal lenders, protecting the most vulnerable and, crucially, providing the alternative. As it stands, illegal lenders do not receive sentences proportionate to the crime that they commit (falling well below that of fraud), and additional resources should be released by HM Treasury to enable the Illegal Money Lending Team to combat the changing face of the problem.
“To protect those most at risk, we must stretch every sinew to bring hidden debt to the surface: including through a national awareness campaign and updated guidance for debt advisers, housing associations, Jobcentre work coaches and the police.
But we must also do more to address low levels of financial resilience – and provide a safe alternative to borrowers in need.”