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According to the Department of Trade and Industry, it is estimated that 165,000 households in the UK are borrowing money from illegal sources, persons or bodies known as “loan sharks”. Essentially, loan sharks offer higher than normal interest rates to those individuals who are unable to obtain credit from conventional sources; and they often back their repayment claims with threats of violence or blackmail. Usury laws have, in the past, made the existence of loan sharks quite commonplace, while the figure of the loan shark has become widely represented in literature and on film. However, despite their negative representations, the current rate of people borrowing money from loan sharks in Britain is still surprisingly high.
The British government, however, have proposed to deal with this problem by pledging £1.2 billion, which will go towards providing extra enforcement teams in order to tackle the problem of illegal money lending, as well as helping to promote financial inclusion for disadvantaged groups. Glasgow and Birmingham have already implemented pioneering schemes to combat loan sharks in their respective areas and in addition, have started to pull together funding to build these projects and extend them to similarly blighted areas in Britain, including Sheffield, Liverpool and West Yorkshire.
Ed Balls, economic secretary to the Treasury, commented:
“This important project has helped give victims in the West Midlands the confidence to come forward, an awareness of better ways to borrow and helped us build evidence against loan sharks to help bring them to justice.”
According to the Department of Trade and Industry report, half of the 165,000 households that borrow money from loan sharks are in the UK’s most deprived areas; while the total value of money put forward by illegal money lenders in Britain each year amounts to nearly £40 million – with repayments amounting to over £120 million annually. According to Ian McCartney, a trade and industry minister:
“Loan sharks prey on the poorest people in our communities and use threats and violence to intimidate the people they are ripping off. These people are the lowest of the low and the pilot projects have done a fantastic job in getting loan sharks behind bars where they belong.”
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