Dealing with loan sharks

It’s best not to borrow money from unlicensed lenders (known as loan sharks), but if you have and you owe money to them, you have no legal obligation to pay them back. You should report them immediately – see below.

Loan sharks are unlicensed lenders who have no legal right to take your money, even if they have lent you money and claim that you are in debt to them.

Loan sharks and the law

Loan sharks will start out appearing friendly. And if you keep up your repayments, they might stay that way.

But the reality is, even if you do, any money you borrow will come at a very high price.

There are many risks attached to borrowing from a loan shark:

  • You might be harassed or threatened if you get behind with your repayments - there have been reports of people being intimidated or attacked.
  • You might be pressured into borrowing more money to repay one loan with another, and end up in a spiral of debt that you can never repay.

Although some loan sharks resort to intimidation and even violence, they are not beyond the law. Any lender – licensed or unlicensed – who harasses you is breaking the law.

Some loan sharks will threaten you by saying you will be prosecuted and even sent to prison if you don't pay up. This can't happen – an unlicensed lender such as a loan shark has no legal right to recover the debt.

In fact, they have no legal right to make you pay the loan back because the loan is illegal. 

How to spot a loan shark


Contact the police or your local service Security if you or your family feel you are in immediate danger.

A loan shark may:

  • offer little or no paperwork, such as a licence, credit agreement or record of payments
  • refuse to give information, such as the interest rate or how much you owe
  • take items as security, such as passports, bank cards or driving licences
  • refuse to allow you to settle your debt
  • get nasty – they may resort to intimidation, threats or violence 

How to check a lender is legitimate

The Financial Conduct Authority (FCA) keeps details of all licensed lenders.

If a lender isn’t listed as having a current licence to lend money, don’t borrow money from them and don’t let them come into your home.

Check the Consumer Credit Register to see if a lender is licensed.

Reporting a loan shark

If you have borrowed money from a loan shark, or you’ve been approached by someone that you think is a loan shark, you can report them in confidence to an Illegal Money Lending Team.

If you live in England

If you live in Wales

If you live in Scotland

If you live in Northern Ireland

  • call 0300 123 6262

Get help

Whatever you do, don't delay contact one of the numbers above.  If you really do need to borrow money see Deciding on the best type of credit for you. But best of all try and get your finances under control with our Budget planner and find ways you can save or cut back with Budgeting to make the most of your money.

If you need help sorting out your finances talk to one of the many Service charities or money advice organisations, including Citizens Advice and The Royal British Legion - see Where to get help if you're in debt.

Last reviewed: 28/06/2017