Britain is a nation of money secrets.

Two in five of us confessed in a recent survey to concealing a financial product from a loved one, such as a credit card or loan. But despite how ubiquitous it is to disguise our financial situation, some hidden debts are worse than others. Money borrowed from an illegal lender is arguably the most dangerous category of hidden debt. And yet there remain large gaps in our collective understanding of this notoriously elusive crime.

This report attempts to put this right – and is the culmination of the first major study of illegal money lending in a decade. We travelled the breadth of the country to understand where and how illegal lending takes place; commissioned polling of over 8,000 UK adults; compiled and analysed the largest sample of known victims to date; and heard first-hand the powerful stories of those exploited, often by ‘friends’ who turn out to not be friends at all. In England today, we estimate that as many as 1.08 million people could be borrowing from an illegal money lender.

Illegal lending exists in many forms, from small-scale lenders who pester their victims into repayment to violent predators and organised crime groups. Some lenders even attempt to add a thin veil of legitimacy to their illegal lending by advertising themselves as a company, drawing up fake contracts, and independently lending to vulnerable clients while working for a separate, legitimate company. Yet the practices used by illegal lenders are changing. New evidence presented in this report shows illegal lenders to be increasingly operating online, using the rapidly evolving social media landscape to entice and exploit new victims.

Using an unpublished dataset of over 1,200 victims, we have carried out the first analysis of its kind to understand the picture of loan shark victims today. What emerges in the data of known victims is that anyone can be exploited by an illegal money lender, but most victims face a range of interwoven disadvantages – low incomes, long-term health problems and pre-existing indebtedness. These are the people at the sharpest edge of today’s cost-of-living crisis. And the combination of pressures on household budgets, low financial resilience and increasingly limited credit options is liable to create a perfect storm in which people are driven towards exploitation.

Given this context, the continued scale of the problem and its ruinous impact on the lives of the most disadvantaged people in society, the CSJ believes that we must urgently renew the fight against illegal money lending. In Swimming with Sharks, we advance 24 recommendations to tackle illegal lending in England today and put people on a path to financial resilience.

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