Government illegal lending figures
The government agency behind the campaign 'Stop Loan Sharks', The England Illegal Money Lending Team, states that nearly one in 10 people who borrowed money from illegal lenders known as 'loan sharks' in 2021 did so for Christmas, and more than half of the victims had borrowed to pay for food and fuel.
More people are struggling financially this year because of the rising costs of food, fuel and energy bills. Once upon a time, people turned to payday loan companies such as Wonga and QuickQuid for short-term help, but with them no longer operating, the concern is more people will turn to illegal loan sharks to make ends meet.
Borrowing between friends and family isn't illegal, but what is against the law is lending money to lots of people to earn high rates of interest without official paperwork and then using threatening behaviour if people aren't able to repay on time. Some loan sharks pose as a friend willing to lend money without explaining what they expect in return, resulting in victims owing hundreds of pounds in interest and being threatened if they can't pay.
In response to the latest figures, founder and CEO of My Community Finance, Tobias Gruber, said:
"It is abhorrent that loan sharks are taking advantage of vulnerable people in times like these. Payday loan companies like Wonga and QuickQuid didn't get things right, but they did serve a purpose for thousands of people who couldn't access mainstream lenders. With them gone, it's left a gap in the market for illegal loan sharks to prey on those desperately trying to make ends meet.
"There are regulated lenders out there, designed for people who don't have a good credit score, and other ways to borrow through ethical organisations like credit unions. If you need to borrow money but have been unsuccessful with traditional high street lenders, don't give up - there are lenders you can find online who may be able to help you.
"Always check to see if a lender is regulated by the Financial Conduct Authority - this gives you the reassurance that they'll treat you fairly and be transparent about their terms. If you're struggling with debt, seek guidance from Citizens Advice, StepChange, MoneyHelper or the National Debt Helpline".
For more information from the Stop Loan Sharks campaign visit:
https://www.stoploansharks.co.uk/fears-over-debt-as-more-people-could-turn-to-loan-sharks-to-cover-christmas/
About Tobias Gruber
Tobias Gruber is the founder and CEO of My Community Finance. For the past 30 years, he's been a prominent leader in investment banking and asset management for some of the sector's most renowned banks, including Credit Suisse, SwissBank, JP Morgan and Morgan Stanley.
Fast forward to 2018, Tobias launched My Community Finance to provide a platform for the financially excluded, helping people to get back on their feet with ethical and socially responsible lending. Within 36 months, My Community Finance has become accountable for 25% of borrowing within the credit union sector.
Tobias has experienced first-hand how certain areas of the finance world are ripe for change and is a passionate advocate for using fintech to help people and solve society's economic problems.
About My Community Finance
My Community Finance is on a mission to transform how its customers manage their money by giving them access to ethical alternatives through two of the U.K.'s biggest credit unions: My Community Bank and Castle Community Bank.
Credit unions give a lifeline to customers who struggle to access mainstream credit by introducing them to financial communities that don't prioritise profits and whose unique regulatory structure means they can offer fairer rates.
Based in London and launched in 2018, My Community Finance is fully authorised and regulated by the Financial Conduct Authority and is a trading name of Amplifi Capital (U.K.) Limited, which has offered ethical and responsible financial products to near-prime consumers since 2015.
