Posted 12/09/2022

Look out for loan sharks

A loan shark is an unlicensed moneylender who often targets people on low incomes or who find themselves in difficult times.

Licensed moneylenders are regulated by the Financial Conduct Authority (FCA) and must follow the FCA's codes of practice. Loan sharks are not licensed and operate outside the law. If you borrow from them, it's likely you'll:

  • get a loan on very bad terms
  • pay a huge rate of interest
  • be harassed if you get behind with your repayments
  • be pressured into borrowing more from them to repay one debt with another

If you've borrowed from a loan shark

If you have borrowed money from a loan shark, you are under no legal obligation to repay the debt. If a lender isn't licensed by the FCA then they have no legal right to recover the debt.

Loan sharks sometimes frighten people by saying they'll be prosecuted and even sent to prison if they don't pay up. This can't happen - not repaying a loan from an unlicensed lender isn't a criminal offence.

You should contact your local Trading Standards office immediately. They will help you deal with your situation and the loan shark.

Other ways of borrowing money

If you need a loan, always go to a licensed lender. There are reputable lenders who'll consider lending to you even if your income's low, your credit rating's poor or you only need a small amount for a short while. Always shop around for credit though - just because a lender is licensed it doesn't necessarily mean you are getting a good deal.

If you need to borrow a small amount for a short time, look into borrowing from a credit union. Credit unions encourage you to save what you can and only borrow what you can afford to pay back. The most you'll pay in interest is one per cent a month, so interest on a £100 loan won't be more than £1 a month.

If you are struggling to manage your money, help is at hand. There are organisations that can help you to set a budget and become debt free.

If you’re threatened by someone who lends you money

If someone who has lent you money threatens you or is violent, contact the police straight away.

Do this even if it’s an informal loan from someone you know, such as a friend or family member.

Organisations that can help

Step change debt charity: freephone 0800 138 1111 or visit

Turn to us national charity: freephone 0808 802 2000 or visit

National Debtline: freephone 0808 808 4000 or visit

Christians Against Poverty: freephone 0800 328 0006 or visit