Question to the HM Treasury:

To ask His Majesty's Government what assessment they have made of the reasons behind UK citizens borrowing from loan sharks; and what steps they will take to reduce the number of UK citizens borrowing from loan sharks.

HM Treasury regularly monitors developments in the consumer credit market, including those regarding illegal money lending, as part of its normal process of policy development.

However, it does not conduct its own research as to the scale of illegal money lending in England. Instead, HMT draws on the research of various stakeholders, including the Illegal Money Lending Teams (IMLTs), consumer groups and thinktanks, to inform policy development.

HM Treasury recognises the risks posed by illegal lenders and the harmful impacts they cause to their victims and communities

That is why, in financial year 2022/23, the Government will provide over £6.7 million of funding to IMLTs across the UK, an increase of over 5% compared to 2021/22. This funding enables IMLTs to investigate and prosecute loan sharks and use their legal powers to tackle the wider criminality they inflict on communities, such as violence and blackmail.

Consumers use illegal lenders for a variety of reasons. However, the Government is overseeing many innovative affordable credit initiatives which will expand the provision of affordable credit to those who may otherwise use an illegal lender. This includes by:

• legislating to allow credit unions to offer a wider range of products and services;
• providing Fair4All Finance with £3.8m of funding to pilot a No-interest Loans Scheme (NILS), designed for consumers in vulnerable circumstances who would benefit from affordable rather than high-cost credit to meet unexpected costs; and,
• releasing £100 million of dormant assets funding to Fair4All Finance to support their work on financial inclusion. This includes exploring different methods of advertising affordable credit products and ensuring vulnerable consumers are aware of all options available to them.