'Loan Shark' Warning In The North

The Department of Enterprise, Trade and Investment's Trading Standards Service in the North is advising consumers, who are unable to access credit through the usual mainstream channels such as bank loans, credit cards etc, not to resort to illegal money lenders.

Illegal money lenders, or 'loan sharks' as they are more commonly known, are unlicensed and operate outside the law. It is a criminal offence for a person or business to engage in activities that require a consumer credit licence when they are not a licensee.

Because they are not licensed, 'loan sharks' operate unlawfully. If an individual borrows from a loan shark it is likely that they will:

• get a loan on very poor terms;
• pay an extortionate rate of interest;
• be harassed if they get behind with their repayments;
• be pressurised into borrowing more from the 'loan shark' to repay one debt with another.

Jimmy Hughes of Trading Standards said: "The best advice for dealing with 'loan sharks' is 'don't'. They're unlicensed moneylenders who charge very high interest rates and sometimes use threatening behaviour and violence to frighten people who cannot repay their loan.

"If an individual has borrowed money from a 'loan shark' there is no legal obligation to repay the debt as the loan is unenforceable. If a lender is not licensed by the Office of Fair Trading (OFT) then they have no legal right to recover the debt.

"Loan sharks sometimes frighten people by saying they will be prosecuted and even sent to prison if they do not pay up. This cannot happen. Not repaying a loan from an unlicensed lender is not a criminal offence. Any lender, licensed or unlicensed, who harasses a consumer is breaking the law. Consumers should report any 'loan shark' to the PSNI if the 'loan shark' is threatening or uses violence."