Anyone lending money without a licence from the Office of Fair Trading (OFT) is breaking the law. You can check with the OFT if a lender has a licence.
There have been many reports in the press about loan sharks using violence or intimidating tactics to get their money back. Therefore, if you are struggling financially, it is best to avoid loan sharks as their lending practices and repayment structure can be unethical and unfair. Interest can increase at an alarming rate and you could struggle to keep up with repayments. This could mean that you’re forced to get a second loan and your debts could spiral out of control.
Illegal lenders are not regulated by any industry bodies; therefore if you have been approached by one, you should report this to the police. Similarly, if you have already taken out a loan with a loan shark and are having repayment problems or have been threatened, then you should also report this to the police as they have special teams available to provide support and bring unlicensed lenders to justice.
Baines and Ernst Ltd