Debts & Loans

The number of loan sharks targeting hard-pressed families in Scotland has risen sharply, investigators charged with tracking down illegal money lenders have claimed.

In the last two weeks the Scottish Illegal Money Lending Unit, a government department set up four years ago to deal with the problem, has received numerous tip-offs about illegal money lenders operating across the country, but particularly in some of the poorest areas of Glasgow.

"Over the last few days alone we've had a larger than usual number of reports coming in about people having an involvement with loan sharks. Normally we only get a slow trickle of information over a period of months but we're definitely experiencing an unusually high volume of calls," said a spokesman for the unit. "We expect illegal money lending will rise because more people are living right on the edge and as things become worse many are turning to loan sharks."

According to investigators a typical loan shark will charge at least £3 a week interest for every £10 borrowed, but some will go as high as £5 per week.

"We hear a lot about threats of violence being made to people who have difficulty paying, and actual violence when people can't pay the loans back, but unfortunately nobody is really prepared to come forward and tell us any great detail about that," said the spokesman for SIMLU, which receives funding from the Department for Business, Enterprise & Regulatory Reform. "People do pay them back so the lenders obviously think it's worth doing. Strangely, a lot of people feel a moral obligation to honour the debt, interest and all. Often they don't understand how much they've paid back already."

SIMLU has identified illegal money lending as a particular problem in Glasgow, Inverclyde and Renfrewshire. "It seems to be concentrated in areas where there was heavy industry and there was a pattern of people getting taken on and then laid off. In the past they used illegal lenders to plug the gap and it's starting again," said a SIMLU investigator. "People do it because it's easy. For some people a loan shark isn't as intimidating as walking into a bank and having to sign a whole load of paperwork. They just go to a loan shark and say 'I need to borrow £50' and they get it there and then. There's no credit checks, no waiting, no forms to fill in. A loan shark provides instant credit, which is what people are looking for".

Since SIMLU was set up in 2004, only eight loan sharks have been convicted. Around 60 cases are ongoing but it can take up to nine months before they get to court.

At the Citizens Advice Bureau in Glasgow's Maryhill, staff say they are only too aware of the stigma people feel when they are in debt to a loan shark. "We've certainly got a lot more people coming in with debt problems but they're not usually ready to open up and tell us whether or not loan sharks are included in their list of creditors," said bureau manager Jean Cheyne. "It's not the type of thing they want to broadcast, and the illegal money lenders encourage that."