In today’s times, it’s easy to pretend to be someone’s friend and offer money when they most need it. In the UK, there are lots of people and families with a low income and a poor credit score. Obtaining long term loans from banks and building societies becomes difficult for them. That’s when they may fall prey to a lender who is helpful but is a loan shark in disguise. Falling prey to loan sharks is very easy as they seem to be like any other lender. But what you see is often not true.
Who is a Loan Shark?
A shark is a pretty scary fish. No wonder a loan shark uses the same analogy. A loan shark is a dangerous person or body offering loans at a high interest rate. They don’t hold an authorization from the local financial regulator, the Financial Conduct Authority (FCA) in the UK. Gullible and desperate people are the target for a loan shark. Such people are easy to convince as they don’t verify a lender’s credibility. They blindly trust anybody and everybody. This can be very dangerous in this age of fraud and trickery.What Does the FCA Do?
The Financial Conduct Authority (FCA) is a financial regulatory authority based in the United Kingdom. It came into existence on April 1, 2013 and has its headquarters in London. The FCA does not work with the UK Government. It is an independent body responsible for regulating the conduct of the financial services industry. It regulates financial firms operating out of the country, provides services to customers and maintains the integrity of the financial market. One of their important functions is taking steps to protect consumers from frauds of a financial nature. Any individual or firm with an objective to provide regulated financial services or credit facility must first apply to the Financial Conduct Authority (FCA) for authorization. Only on getting this certificate from the FCA can they accept deposits and give loans. Unauthorised lenders have to pay fines and can even be face imprisonment.How To Spot a Loan Shark?
A loan shark has a clever disguise and that makes them tricky to spot. Finding out whether a loan shark is next to impossible in the early stages. But, if you look carefully, there are always some things that look suspicious. We are scared of loan sharks as they are the last people you should deal with, however badly you might need the money. You can follow these tips to beware of loan sharks.- If the website of a lender doesn’t have contact details, it means something is fishy. Every lender would have their email ID and telephone number mentioned on their website.
- An authorized lender always has an FCA Authorisation number displayed on their website. Look for the License number of the firm.
- If you’re unclear whether the firm is a broker or direct lender, it’s best to avoid them.
- An important thing to be careful about is the URL of the website. Websites of genuine lenders are secure and have ‘https://’ instead of ‘http://’ in their URL. If it’s an insecure website, the lender may misuse any details you fill online.
- If you’re a lender or broker approaches you with a loan offer, it’s best not carry on any further dealings with them. No broker or lender would approach you. You go to a lender when you need a loan, not the other way round.
- Loan sharks offer no paperwork, for example, a credit agreement or record of payments.
- A fake lender may refuse to give you information about how much you owe and what your interest rate is.
- You may have to give documents like bank cards, driving license and passports as security for the loan.
- If you’ve taken money from a loan shark, you may find your debt suddenly increasing. Additional charges, not told earlier, may also add at any time.
- Even if you’re willing to settle your debt in full, a fake lender may not allow you to do it.
- As long as you’re keeping up with repayments, all is well. But the moment you miss a payment, you’ll start getting threats. The loan shark may also turn up at your door and resort to violence.