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Loan sharks warning as debt enquiries hit record high

“We know many people are struggling to make ends meet, but loan sharks should never be used – they are despicable criminals who make vast sums of money preying on vulnerable people with money problems"

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People struggling to make ends meet are being urged to avoid ruthless loan sharks at all costs as latest figures show debt advice enquiries have hit a record high, council leaders warn today.

The Local Government Association (LGA), which represents councils in England and Wales, is urging people desperate for a loan to steer clear of illegal money lenders who typically charge sky-high interest rates, rely on extortion and are likely to plunge them into worse debt for a longer period.

It is calling for tougher sentences for loan sharks and says anyone experiencing money problems should contact councils and their partner organisations who are working increasingly closer together to develop better financial support for households with debt and repayment worries.

The loan sharks warning comes as latest figures show that 12,652 people a week in the UK are seeking help for problem debt – the equivalent of one person every 48 seconds.

The number of enquiries made to debt advice charity Step Change in 2018 was 657,930 – a 14 per cent rise on the 577,678 enquiries in 2014, and 6 per cent up on the 619,946 enquiries made in 2017.

Councils have supported several recent prosecutions of loan sharks who target the most vulnerable, rarely issue any paperwork and typically use intimidation and violence to enforce repayments. These cases include illegal loans with interest rates of 100 per cent, although criminals charging interest rates of 1,000 per cent have also been previously convicted.

Councils know financial crises are often caused or made worse by other life events, such as loss of employment, a change in benefits entitlement or illness, leaving less time to research cash-flow options.

The LGA is urging people who think they are going to have difficulty paying bills, or are worried about meeting other financial commitments, to seek free impartial advice as early as possible.

Small loans from Community Development Financial Institutions (CDFIs) and the credit union sector offer safer and more affordable ways to borrow money. Households awaiting a Universal Credit payment may be entitled to a budgeting advance.

Despite significant pressures on their budgets, councils are determined to help people with debt worries and are working together with partners in the voluntary and private sectors to develop better support for people facing problems with debt, cash flow and financial exclusion.

Some councils are using data to intervene earlier by identifying people with low-level payment difficulties and targeting them with support, and working with credit unions and the voluntary sector to widen the net of support.

Other councils have established discretionary hardship funds to help lower-income households obtain school uniforms for their children and help those facing considerable problems with rent payments.

However, with councils having lost 60p out of every £1 it had from government to spend on services since 2010, providing support to those in need from local budgets is increasingly become difficult. 

The LGA is calling on the Government to consider and fully fund the role of councils in supporting low-income households with debt and repayment worries. 

Cllr Morris Bright, Vice Chairman of the LGA’s Safer and Stronger Communities Board, said:

“We know many people are struggling to make ends meet, but loan sharks should never be used – they are despicable criminals who make vast sums of money preying on vulnerable people with money problems.

“Illegal money lenders are bullies who charge astronomical interest rates and subject their victims to intimidation and violence when they often struggle to repay their loans at rates they simply can’t afford.

“There are much better, safer and cheaper ways people can manage their money.

“Anyone struggling with debt problems can contact their local council or advice provider first. There are also charities offering similar services. These will all be focused on offering genuine help in the most affordable way, rather than unscrupulous loan sharks who profit from other people’s misery and should be avoided at all costs.

“With councils’ budgets under significant pressure, the Government needs to ensure local authorities have the necessary funding to support those in need.”

Case studies

  • An illegal money lender pocketed £340,000 from vulnerable customers in six years has been sentenced following a prosecution supported by Dudley Council. The 62-year-old, from Dudley, issued more than 270 loans ranging from £1,000 to £3,000 to 58 people. He charged customers interest of between 50 per cent and 100 per cent and most of his customers were paying off two or more loans at the same time. The defendant was sentenced to 22 months imprisonment, suspended for 18 months, and ordered to do 80 hours unpaid work.
  • An illegal money lender from Derbyshire has been ordered to pay back £231,250 he made from vulnerable customers within three months or face a six-month default prison sentence. The defendant had issued about 1,500 loans totalling £211,000. He had around 170 customers and charged an average interest of 40 per cent on each loan. The defendant was previously sentenced to eight months in prison, suspended for 18 months. The investigation was supported by Derbyshire County Council trading standards.
  • An illegal money lender previously convicted and jailed for running an illegal loans business in a case supported by Devon, Somerset and Torbay Trading Standards Service, has been sentenced for further similar offences. Following his original sentence, the defendant’s wife took over operations run from their home in Newton Abbot, Devon, making 18 new loans and collecting more than £14,000 from borrowers. The defendant was jailed for two years and three months and his wife received a suspended prison sentence.
  • A man and woman have been ordered to pay back £69,000 or serve prison sentences after all their available assets were seized by the courts. The pair had previously admitted illegal money lending and money laundering, following a prosecution supported by Enfield Council and Newham Council. One victim needed funds for her mother in Thailand who was diagnosed with throat cancer, but after she fell behind on repayments she received a demand for £851 on her doorstep.
  • A woman has been ordered to repay £40,000 in three months under the Proceeds of Crime Act after admitting unlawful money lending. Bank records showed that the defendant issued more than 500 loans to around 100 members of the Zimbabwean community. She received a suspended prison sentence and will face a longer sentence if she fails to repay the money within the set time period, following a prosecution supported by Stoke-on-Trent City Council.
  • Nationally, Illegal Money Lending Teams have secured more than 394 prosecutions for illegal money lending and related activity, leading to nearly 480 years’ worth of custodial sentences. They have written off £74.9 million worth of illegal debt and helped over 29,000 people.
  • To report a loan shark in confidence, call the England Illegal Money Lending Team on 0300 555 2222.


  • Councils in England face an overall funding gap of £8 billion by 2025. The LGA’s #CouncilsCan campaign calls on the Government to secure the future of vital local services and the long-term financial sustainability of councils. 
  • An estimated 310,000 people are in debt to illegal money lenders in the UK, according to, while 272 people have contacted Citizens Advice with issues related to loan sharks/illegal lending in the past year - equivalent to 23 a month.
  • Nearly four million people on lower incomes in the UK resorted to using high-cost credit to meet day-to-day living costs in 2017, while the most common coping strategy used by people in the UK after a “life event” and who are in “problem debt” is to seek high-cost credit, according to research by StepChange, available here and here.
  • The average short-term high-cost credit debt amount has increased from £1,519 in 2017 to £1,755 in 2018 – research by StepChange.
  • Reshaping financial support: How councils can help to support low-income households in financial difficulty
  • People facing financial difficulty can also seek the support of Citizens Advice or a credit union