Up to 1.9 million adults in Great Britain (equivalent to 4% of the population) have turned to an unlicensed money lender or loan shark in the past 12 months according to an IPSOS UK survey commissioned by Fair4All Finance.
More than half (51%) of those who turned to unlicensed money lending practices were declined by at least one other form of credit in the past 12 months.
Having to turn to unlicensed lenders and loan sharks is not reserved to the most financially vulnerable in our society. A significant proportion (38%) of those using either an unlicensed lender or a loan shark are earning above £3,200 per month, far above the median monthly take home pay of £2,568 in the UK. While employment status can play a role in financial resilience, a similar proportion of full-time (3%), part-time (2%), self-employed (2%) and unemployed (1%) adults have taken out unlicensed loans or used a loan shark.
Use of unlicenced money lenders is also a notable among households with children; nearly two thirds (65%) of those who said they had turned to an unlicensed lender or loan share in the past 12 months have children.
Many people are having to look close to home when it comes to borrowing money, with over a fifth (21%) of people taking loans from family or friends. Of those borrowing from family and friends, a significant proportion are from ethnic minority backgrounds or financially vulnerable sections of society. Those of a black ethnicity make up 48% of this group, compared to those of a white ethnicity who make 18%.
As well as placing a burden on family members who may themselves also be feeling financial pressures, lending money to people you know also poses a risk to family relationships and friendships. Almost one-in-ten (9%) of respondents who borrowed from family members, and 17% from friends, reported that their relationship weakened as a result.
To read the full report click here
St Albans Community Bank supports the campaign to stop illegal money lending.
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