Warning: this report contains flash photography from the start.
Loan sharks are exploiting the cost of living crisis to prey on the most vulnerable families, specialist investigators have told Channel 4 News.
Enforcement teams – set up to specifically prosecute illegal lenders across the UK – say loan sharks are targeting households struggling with squeezed budgets, with parents approached at school gates and victims often threatened with extreme violence.
The Channel 4 News Social Affairs team witnessed a dawn raid in Stockport, led by England’s Illegal Money Lending Team, with Greater Manchester Police forcing entry into a property to arrest a man and a woman on suspicion of illegal money lending.
The operation was part of a crackdown on suspected loan sharks amid concerns a cold winter combined with soaring inflation could drive more people into the grasp of illegal lenders, who offer informal, short-term loans with spiralling interest rates – and threats of violence if money is not repaid.
Billy*, based in South Wales, described how he was abducted from his home in the middle of the night, taken to a field and ordered to “dig his own grave” after a late debt payment.
On another occasion he was told: “You have got two kids haven’t you? It would be a shame if someone ran over one of them wouldn’t it?”
Billy, who says he borrowed more than £30,000 from loan sharks, said: “They don’t care about you, your kids – they will take everything you got and then some.”
An estimated 1.08 million people are borrowing from illegal lenders in England alone, according to the Centre for Social Justice. The last official government estimate in 2010 was 310,000 across the UK.
While the true scale of what has been described as the “most dangerous hidden debt” is unknown, credit unions, debt charities and food banks say they are hearing increasing reports of people resorting to loan sharks for everyday basics.
Data from the Illegal Money Lending Team for England, shared with Channel 4 News, reveals that over half of victims (52%) who had borrowed from loan sharks this year had done so to pay for food and fuel.
Tara*, a mother-of-four who fled domestic abuse, told Channel 4 News that her current financial situation and lack of high street credit options has left her contemplating approaching a loan shark, despite the risks.
“If I haven’t got the money to feed and heat my house and my children, if that is the route I have to take, I will follow the consequences.”
Tony Quigley, the head of England’s Illegal Money Lending team, said: “With the energy rise, that’s just going to get worse.
“The pressure that is being applied is immense – the phone calls, the knocking on doors, the constant harassment. We’ve seen people that have taken £250 from an illegal lender and ended up owing £90,000 because they’ve doubled it, doubled it and doubled it.”
A government spokesperson said: “We are cracking down on this cruel practice. We’re increasing funding for the Illegal Money Lending Teams […] equipping them to investigate and prosecute illegal lenders while working to support their victims.
*Names have been changed to protect identities