Loan sharks are dangerous! But, Leeds council have fought back! Learn what communities are doing to defeat loan sharks in the UK and how to identify a loan shark with Quick Loans Express.

Story Highlights:

  • How big the problem of loan sharking is in the UK
  • Why people turn to loan sharks
  • What the authorities are doing about this problem
  • How successful the Illegal Money Lending Team has been in the UK
  • What else can councils do to tackle illegal lenders
  • Using the Proceeds of Crime Act 2002 to make loan sharks pay
  • Ways to prevent people resorting to loan sharks: Entitlement to benefits, budgeting advice, sleep patterns, alternative lenders

What is a Loan Shark?

A loan shark is a unauthorised lenders that lend money to people who are unable to obtain instant payday loans from mainstream lenders. Loan sharks often use illegal collection methods, and in some cases, violent. In this article, Quick Loans Express will examine a unique approach to the problem of loan sharking in the UK.

Often the victims of loan sharks are those who are on benefits and/or unemployed. Hence, they find it difficult to open a bank account and to access loan facilities. Their situation of being on a low income is made worse by the fact that they might also have a poor credit history and high existing debts. This makes them a high-risk for short-term credit providers. Consequently, they turn to illegal lender to borrow money.

Some victims of loan sharks go into the situation with their eyes wide open. They recognise the dangers of loan sharks but feel they can take advantage of the credit offered, pay it off in one month and not end up owing hundreds of pounds more in crippling interest fees. However, budgeting doesn’t always go the way we want and it only takes one missed payment for the interest to spiral out of control. Also, they forget they’re dealing with illegal lenders. Unlike legitimate lenders like banks, it’s in the best interests of the loan sharks to make sure that borrower does not pay off the loan on time. They preferably encourage the borrower to take out a further loan to cover how much they owe.

Loan Sharks in the UK

Loan sharks often operate in a particular area and so are part of the community. Forget the Hollywood stereotypical idea of a rough guy who is physically intimidating. Until their borrowers default on their illegal loans, they present themselves as the ‘good guy’ who’s doing their victim a ‘favour’. After all it appears that they have no other alternative. Loan sharks are extremely persuasive if you’re in a position where you need money to support your family.

It’s frightening but true. No one knows the scale of the problem of loan-sharking in the UK. Since, it’s a crime where the victims are reluctant to go to the authorities for help. They are not only intimidated by the threat of physical violence to themselves and their families. They also worry about being prosecuted for borrowing from an illegal lender. Loan sharks prey on the vulnerable. Sadly, they tell their victims that they could also face court charges if it’s discovered they borrowed money from an illegal lender.

However, the England Illegal Money Lending Team (IMLT) estimate that 310,000 people in the UK are in debt to loan sharks. Probably your first question is to wonder why these people would put themselves at the mercy of these unscrupulous criminals.

How to Fight Loan Shark Harassment

Set up in Birmingham as a pilot scheme in 2004 to investigate loan sharks, the Illegal Money Lending Team (IMLT) had such an impact that it received further government funding to operate in other cities. Part of the National Trading Standards organisation, each IMLT consists of specialist investigators and Liaise Officers who have backgrounds in the police, trading standards or debt advisory services.

Their role is to investigate reports of loan sharks (often made to their confidential. If necessary, anonymous hot-line:; 0300 555 2222) and prepare a case for prosecution. They also put the victims in touch with organisations which can help them with free debt advice, alternative credit facilities or financial support.

An important part of their work involves co-operating with other agencies such as the police, housing associations, etc. They also reach out to educational providers like primary and secondary schools. This enables them to reach as many vulnerable people as possible. They warn them about the dangers of loan sharks before they fall prey to them.

In research they carried out, they found that 3 out of 4 people interviewed were unable to tell whether their money lender was licensed. Ironically, there are many legal and reliable same day loan for bad credit providers that the public can approach for help. As a result, people can also contact them to check the legitimacy of a lender on the Financial Conduct Authority’s database.

The IMLT’s Work to Prosecute Loan Sharks

Since 2004, the work of the IMLT has led to 370 prosecutions with a total of 318 years’ worth of custodial sentences. As of April 2017, they have helped over 26,500 victims of loan sharks and written off £71.9 million of illegal debts. However, it’s believed that this is just the tip of the iceberg. The people they helped represent less than 10% of all victims of illegal lenders in the UK.

What Else Can Be Done to Tackle Illegal Lenders?

A scheme overseen by the Leeds City Credit Union in conjunction with the IMLT, and with the full cooperation of Leeds Council, is part of an initiative to help people stay. They will save away from illegal lenders and the scheme directs them to alternative solutions to their money problems and to get them into the habit of saving regularly.

This savings incentive is open to all Leeds Council housing tenants and it encourages them to open an account at Leeds City Credit Union to put by some money. If they join now and save regularly until November, they will be entitled to a £25 bonus. This will will be paid automatically into their account. This programme has already helped over 60 families in the area. The beauty of the scheme is that it hasn’t cost the taxpayer a penny. So where does the money come from?

Using the Proceeds of Crime Act 2002 to Make Loan Sharks Pay

Originally put into place to facilitate the civil recovery of the proceeds from crimes like money laundering, this piece of legislation is now being used in the fight against loan sharking. Recognising the scale of the problem, the 2016 Autumn Budget statement recommended that part of the cash confiscated from loan sharks during their prosecutions should be allocated to Credit Unions in the areas where the illegal lenders operated.

The Leeds scheme is the first such pilot scheme which is hoped will be taken up by other local authorities from 2018. And what better justice is there than to force those who prey on the vulnerable to help them in this way? The question remains is whether it’s enough. There any other solutions to prevent people from resorting to loan sharks in the first place?

Ways to Prevent People Resorting to Loan Sharks

  1. Entitlement to Benefits
  2. Although much is made in the press of ‘dole scroungers’ and benefit fraud, the truth of the matter is that the size of unclaimed benefits is much higher than that which is given to the undeserving. In research carried out by Turn2us as part of their 2016 Benefits Awareness Campaign, they found that 48% of low-income households weren’t claiming the welfare benefits they should have and an estimated £15 billion goes unclaimed every year.

    Similar campaigns must be orchestrated to ensure that those in need are aware of what they are entitled to and claimants should be treated with respect and dignity.

  3. Budgeting Advice
  4. Resorting to loan sharks because of an unplanned for expense is understandable, if misguided. But unfortunately, many people use this solution because they struggle to pay for their basic needs. There’s an underlying problem here if they’re unable to manage their finances. Therefore, budgeting advice is essential and preferably this should start as early as possible. For example, as part of the school curriculum. For those who are older, community projects could be set up to reach as many people as possible so they develop basic budgeting skills.

  5. Alternative Lenders
  6. Organisations like Credit Unions have an equally important role to play in local communities so that people stay out of the clutches of illegal lenders. As not-for-profit member-owned financial cooperatives, Credit Unions are able to distribute any trading surplus to their members in the form of a dividend. Any money earned goes back into the pockets of the community.


The illegal activities of loan sharks is a worrying trend for Britain in 2017. Despite the incredible achievements of the IMLT, a lot remains to be done. It is hoped that the Leeds initiative will be taken up by other local authorities in the UK starting from 2018. We’ve all heard the expression ‘Crime doesn’t pay’ but maybe the criminals should be made to do so. Meanwhile, at Quick Loans Express, we continue to raise awareness of the matter. We also try to help as many people as we can with our short term loans from direct lenders. We are fully authorised.

Crystal Evans
Crystal is a Web Content Manager with a passion for helping others. A Marketing Specialist by trade, Crystal’s first job was in the financial sector and she has been adding verve to personal finance ever since! When in high school, Crystal enjoyed creating revision notes and study aids for her peers – making concepts Crystal Clear. She continues this practice in the post-university School of Life – channelling her love of sharing information into blogging about personal finance

The article "How are Loan Sharks Helping their Victims in Leeds?" was last modified on

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