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Definition of a loan shark

A money lender has to be authorised by the Financial Conduct Authority (FCA) to lend money legally. Money lenders who aren’t authorised by the FCA are breaking the law. They are known as loan sharks.

You can check if someone is registered to lend money on the FCA website.

Borrowing from friends or family

Not all lending needs to be authorised by the FCA - for example, informal, one-off loans between friends or family aren’t against the law. If you’re not sure if a loan needs to be authorised by the FCA, get help from your nearest Citizens Advice.

Even if a loan is informal, anyone who lends you money can’t do anything illegal when they collect it, such as harassing you.

How a loan shark may operate

Loan sharks take advantage of people who are financially vulnerable. Often, the arrangement will initially seem quite informal. Perhaps outside the school gates or at the local pub. What can look like an easy, quick source of money with very few questions asked can turn into a rapidly increasing debt you can never repay.

A loan of £300 for example can spiral into many thousands of pounds because of the extortionate interest rates that loan sharks apply. As the repayments rise, it becomes harder and harder to cover everyday outgoings each month. This forces you to borrow more. It is a vicious circle that leads to ever growing debt. Loan sharks use illegal, often violent and threatening methods to recover the money.

Loan shark warning signs

Warning signs that a money lender is acting illegally:

  • Giving you no paperwork or agreement on a loan
  • Refusing to give you information about the loan
  • Keeping items such as your passport and bank card until you repay the debt
  • Taking things from you if you don't pay on time
  • Adding more interest or charges so the debt never goes down
  • Using intimidation or violence if you don't pay
  • Starting off by being your friend but quickly turning nasty

How to get help if you have borrowed money from a loan shark

If you have borrowed money from someone that isn’t registered with the FCA, you haven’t broken the law. They have.

You can report the loan shark and seek advice in confidence from the Illegal Money Lending Team:

Illegal Money Lending Team
Phone: 0300 555 2222
Text: loan shark and your message to 60003

Contact the police immediately if the loan shark is threatening, intimidating or acting violently towards you.

Since launch, the England Illegal Money Lending Team has supported over 30,000 people and written off over £83 million worth of illegal debt.

You are not alone

The Centre of Social Justice estimates that more than one million people in the UK could already be in debt to a loan shark.

Support with the cost of living

Visit our Support with the cost of living page to access sources of help.

Access free advice on debt and money

Visit the Citizens Advice website to access debt and money advice, and the Money Helper website (previously known as ‘The Money Advice Service). In addition to a wealth of information and resources on their websites, the service also offers free confidential advice over the telephone. No matter what your circumstances, there is always a better alternative than to turn to a loan shark.