# The Dark Side of Economic Strain: The Rise of Illegal Moneylending in the UK

- Link: https://www.directorstalkinterviews.com/the-dark-side-of-economic-strain-the-rise-of-illegal-moneylending-in-the-uk/4121122841
- Published: 2023-06-28T07:44:46+01:00
- Author: Anthony Fox

As the cost of living continues to rise in the UK, a worrying trend has emerged:
the increasing prevalence of illegal moneylending. This phenomenon, also known as
loan sharking, has seen a surge in recent years, with individuals and families turning
to unofficial lenders to make ends meet.

## The Loan Sharks

Two illegal moneylenders, referred to as “D” and “M” to protect their identities,
have shed light on this growing issue. “D,” who has been in the business for two
decades, says that business has never been better. He lends money illegally to hundreds
of people across the country, with most of his “customers” being regulars who pay
off their debts within two to three months. However, they usually return a few weeks
later, trapped in a cycle of borrowing.

“D” notes that with inflation remaining high, demand has soared. He now hears from
single mothers and families looking to borrow smaller amounts of £500 to £1,000 
to pay for necessities like gas, electricity, and groceries. The interest rates 
he charges can be as high as 50%, or even “double bubble” terms, where the original
loan is doubled each month.

“M,” on the other hand, caters to a different clientele. He lends to “the rich” –
people borrowing higher amounts to fund house renovations or to rescue a struggling
business. He claims to have lent millions of pounds over the past 20 years and currently
has about £2m out in loans.

## The Borrowers

Research commissioned by Fair4All Finance, a government-backed body that works on
financial inclusion, suggests that the potential client base for illegal moneylenders
could be expanding. Current users are borrowing about £3,000 on average, and clients
are more likely to be lower-waged, full-time workers.

The consequences of borrowing from these lenders can be severe. “D” refers to himself
as an “enforcer,” alluding to the brutal consequences that can ensue if payments
are missed. These can range from property damage to physical violence. “M” uses 
a different approach, relying on fear and intimidation to ensure repayment.

## The Response

The rise of illegal moneylending has prompted calls for more efforts to help people
manage their debts and to boost alternative options such as community lenders or
credit unions. According to the Bank of England, about 1.98 million people across
the UK use credit unions. However, there is a long way to go before these can plug
the gap left by the exit of higher-cost lenders.

As prices continue to rise, business for illegal money lenders like “D” and “M” 
shows no sign of slowing. However, as Cath Wohlers of the Illegal Money Lending 
Team warns, “They will absolutely bleed you dry. It’s just not worth it. If you 
are in debt, speak to your creditors and have conversations rather than borrowing
more money to get out of it.”

This rise in illegal moneylending is a stark reminder of the economic strain many
people are under in the UK. As the cost of living continues to increase, it is crucial
that more accessible and safer lending options are made available to those in need.

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