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Illegal Money Lending Project

Under the Illegal Lending Project the Department for Business, Enterprise and Regulatory Reform (BERR) has been funding regional teams in Glasgow and Birmingham since 2004 to investigate the impact of strong enforcement against illegal moneylenders (loan sharks).

Illegal moneylenders, or loan sharks, are those who lend money to people without a credit licence. Loan sharks prey on some of the most vulnerable people in society and cause immense misery. It has always proved very difficult to bring them to justice.

BERR has invested £2.6 million since 2004 in the project and secured a further £1.2m from the Financial Inclusion Fund to expand the pilot into Liverpool, W. Yorkshire and Sheffield.  In 2007/8, the project was rolled out throughout England, Scotland and Wales with an additional £2.762m from the Financial Inclusion Fund, with the Secretary of State announcing the launch during his visit to Toynbee Hall on 19th September 2007.

It was announced in December 2007 that BERR will continue to fund an illegal money lending team in every region in Great Britain until March 2011. Current plans are that activity will continue at a similar level of intensity throughout the period, subject to periodic review of the impact of the initiative.

The project is a key part of the Government’s financial inclusion agenda, one of the aims of which is to help people gain access to affordable credit. To this end, the teams will focus on providing support to victims as well as on securing convictions against illegal lenders.

The teams will initially be targeting their activity in the areas identified in research published by the Department in December 2006 as areas where the incidence of illegal money is likely to be particularly high. These areas are:

Wales:  Cardiff, Swansea and the Valleys
South West:  Bristol, Plymouth
London:  Hackney, Tower Hamlets, Newham
South East:  Southampton, Portsmouth, Hastings
East of England:  Lowestoft, Great Yarmouth, Peterborough
North East:  Newcastle, Tyneside
East Midlands:  Leicester, Nottingham, Derby
Yorkshire and Humber:  Leeds, Sheffield and Bradford
North-West:  Liverpool and Greater Manchester

The Birmingham team is expanding its existing operations to cover the North West (except for Oldham), and the South East and the East of England. The Birmingham team is also being given additional funding to support increased financial inclusion and victim support activity in its existing areas: West Midlands, West and South Yorkshire, and Liverpool. The Glasgow team is being given additional funding to enhance its financial inclusion and victim support work in Scotland.

New regional teams are being established in the North East, East Midlands, South West, London and Wales. A rolling programme of local launches began in autumn 2007. We have had launches in Bristol, Southampton, Portsmouth, Nottingham, Norwich, London and Cardiff, and further ones planned for March 2008 in Manchester, Peterborough, Merseyside and the North East.

Since the pilots were established in September 2004, the teams have achieved a number of notable successes:

•  Teams have helped identify almost 250 illegal lenders

•  They've shut down loan books of about £3 million, money that would have been demanded from some of the poorest in our society

•  Proceedings have been instituted against 58 individuals

•  Teams have benefited nearly 2,000 victims

•  Court cases have resulted in prison sentences of more than 15 years as well as 230 hours community service and rehabilitation orders of 24 months

•  Assets worth £12,000 have been recovered

•  Longest prison sentence to date is 6 years 9 months for a loan shark also charged with kidnapping, assault, wounding, blackmail and counterfeiting.

Pilots Evaluation

The evaluation of the initial pilot project (link on right) shows that, since the launch in September 2004, the teams carried out 111 investigations and helped 1765 loan shark victims. They recovered £1m in assets, with a further £1m likely to be collected pending court cases.

The evaluation, together with the research report, is helping to inform policy decisions on taking forward this work with other relevant government departments and organisations as part of the wider social and financial exclusion agenda.