Ruthless loan sharks are targeting children as they leave school, urging them to get their parents to call for cash if they can’t afford new trainers.
The callous money lenders are handing out cards to the pupils in an effort to use peer pressure on vulnerable families.
They have also been spotted at food banks, in casinos, or lurking outside post offices to wait for pensioners.
An investigation by the Financial Conduct Authority has revealed lenders have stolen customer’s debit cards, valuables, passports and physically beaten those who can’t settle their debts.
Andrew Bailey, chief executive of the FCA, said: “Some of the stories we heard were shocking.
“On one estate loan sharks were hanging around the school gate, handing out their details to the children as they left school, telling them to get their mums to ring them if they wanted new trainers.
“At worst, we heard examples of people being forced into criminal activity like prostitution or drug running.”
While the FCA said there was little evidence to suggest the practice of loan sharking was increasing, the report did serve to highlight the extremes the lenders went to to exploit those short of money.
Interest charged on small loans was alarming, it said, often in the region of £160-plus on a £250 short-term loan.
But, while that was below some of the regulated, legitimate businesses advertising on TV and the internet, the methods employed by sharks to recoup arrears was the most worrying aspect.
Examples quoted in the FCA report include:
- “Pensioners borrowed small sums week to week, paying back the money to the loan shark at the post office when they get their pension. Sometimes the lender held the pensioners’ cards or passbooks between pension payment days.”
- “One lender coerced a borrower who owed him money into setting up a cannabis farm in his spare room. They put the risk onto their victims and control them through debt and fear – ‘you owe me’.”
- “A man had borrowed on payday loans, got into worse debt, and then went to an unauthorised lender for money. His partner was approached with her child outside the school when he fell behind, as a warning to pay.”
The FCA concluded: “At the core of many of the stories we heard was an individual, vulnerable to
exploitation, either because of their financial desperation or because of inherent vulnerability to influence and manipulation.
“The lenders seek them out, put them in their debt and seek to keep them there – providing the lender with an ongoing income stream.”