Written by Rosie Neill

Product Marketing Manager

Illegal lenders and loan sharks were the focus for part two of our CPD-accredited 6-part webinar series for university and college staff all about how best to support students with financial risk. And we were thrilled to welcome expert speaker, Steve Ward, from the England Trading Standards Illegal Money Lending Team (IMLT), who operate under the jurisdiction of the Financial Conduct Authority (FCA).

Steve has been a LIAISE Officer for the IMLT for over 13 years, concentrating on working with organisations and partners for the East Midlands Region. He has also previously worked for Nottinghamshire Victim Support and the Nottingham City Council Community Protection Team. Steve’s main roles are victim support, training frontline staff and collating local intelligence.

Here’s an overview of Steve’s session, in which he covered everything that university and college support staff need to know when it comes to loan sharks, including: 

  1. What a loan shark is
  2. How they can be identified
  3. Why students are particularly vulnerable
  4. How staff can best support students who fall victim to loan sharks
  5. Where loan sharking activity can be reported to

What is the definition of a loan shark?

A loan shark is someone who lends money as a course of trade or business (to two or more people) without the necessary license to do so. 

So forget what you’ve seen in the movies; by definition, anybody who does this is a loan shark – and it’s a criminal offence.

What’s needed to run a legal money lending business?

From the 1st April 2014, anyone lending money as a business needs to be authorised by the Financial Conduct Authority (FCA). 

The introduction of this requirement has perhaps led to an increase in loan shark activity, since smaller lenders may be tempted to avoid going through the hassle and expense of authorisation.

How can a loan shark be identified?

Loan sharks by another name

More often than not, victims of unlicensed money lenders are unaware that they’re borrowing from a loan shark. 

To them, the loan shark may just be a friend of a friend or perhaps a work colleague – as was the case of a consultant in a London hospital lending money to staff, who was arrested and prosecuted as an unlicensed money lender. 

In other instances, it might be a ‘community lender’ discovered by word of mouth. Alternatively, a loan shark could be a friend, a partner or someone totally unexpected.

Typical characteristics of an illegal money lender

Since a loan shark really can be anyone and it’s not always clear whether someone is an unlicensed money lender, looking for certain behaviours can be a useful way to spot a loan shark. 

Typical characteristics include: 

  • No credit agreements or contracts given
  • No receipts for payment or payment books
  • Most payments are made in cash and weekly
  • Violence and/or intimidation and threats
  • May suggest payments in kind to themselves or others
  • No mention or shiftiness around interest or repayment process

“If an individual, or a ‘friend of a friend’, is prepared to lend you money as a favour and doesn’t want a written contract, run a mile!”

Steve Ward LIAISE Officer
England Illegal Money Lending Team (IMLT)

Who can be a victim?

Anyone! Everyone is vulnerable to being a victim if they borrow money from someone with no contract or paperwork, be it a stranger, an acquaintance or even a friend or family member.

Students’ vulnerability to loan sharks

As we know, many students worry about finances, which can make them particularly vulnerable to becoming the victim of a loan shark – out of desperation or falling for an offer that’s too good to be true. 

The IMLT have funded the production of a video, Shark. To help raise awareness of how easy it can be to become the victim of a loan shark, it features the story of a student, Liam, who falls victim to illegal money lending.

How can staff best support student victims of loan sharking?

A challenge for staff can sometimes be getting the student to admit that they’re a victim of loan sharking. Often this is because they may be frightened, due to intimidation from the illegal money lender.

In these situations, the only way things will improve for the student is if the loan shark is either paid off in full or stopped by the IMLT.

So the best thing staff can do for students who have found themselves in this position (especially if they can’t afford to repay) is to encourage them to talk to the IMLT’s victim support service, who will investigate and take action against the loan shark to resolve the situation. 

If the student is still reluctant, it may be helpful for staff to emphasise that since the student has borrowed money from a non-licensed source, they may not have to repay any high interest costs back to the loan shark. So the sooner the loan shark is reported, the better for the student.

Where can loan sharking activity be reported to?

Anyone without a license is prosecuted by the IMLT – reports of illegal lending should be made direct to them, not to the police. So if you suspect loan sharking activity or are made aware that a student is a victim, visit stoploansharks.co.uk and speak to an officer via the live chat function or contact 0300 555 2222.

While some investigations and convictions can take time, the IMLT will always be in touch with the victim quickly. It can also be fast to request a warrant and ensure the loan shark’s activities are stopped.

The law is different in Scotland – check out the Scottish Illegal Money Lending Unit’s website for more information.

Myth busting

There are common misconceptions around the phrase ‘loan sharks’ – but most of these are untrue. In fact, your average loan shark isn’t dangerous and won’t harm their victims. 

Here’s some popular myths about loan sharks and why they’re incorrect:

  • Threats e.g. “If you grass me up, I’ll kill you” – out of all the witnesses supported by the IMLT,, 0% have had any physical harm after the team has become involved.
  • Retribution e.g. “If I’m in prison, my mates can still get to you” – the team stays in contact with all witnesses, assesses any new situations and reacts quickly.
  • Promises e.g. “If you report me, nothing will be done” – the IMLT have a 100% success rate in court convictions.

Top tip for students when it comes to loan sharks

Don’t trust a friend of a friend when it comes to borrowing money – if they’re not a financial institution offering a contract, run a mile! Instead, go to a parent/guardian if you can or ask someone you trust for advice.

Watch the recording

The IMLT’s contact details are available via stoploansharks.co.uk. You can also hear more from Steve by signing up for the following training sessions:

This session was part two of our 6-part series for university and college staff, all about how to support students with activities that carry financial risk. Check out all upcoming sessions and register your free place now. The series has been CPD accredited – simply attend at least 4 of the 6 sessions to get your certificate.

And don’t forget to sign up to our staff email newsletter to be first to find out about upcoming staff webinars and get free financial wellbeing resources to share with students.

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