This unprecedented research breaks new ground by gaining access to a hard-to-reach community of illegal moneylending borrowers – voices rarely heard in public debate. At a time of deepening financial pressure, it reveals how illegal lenders are increasingly targeting low-income workers earning £20,000 – £24,999, a group previously less associated with this form of borrowing.

The study, featured in a Channel 4 News special and cited in Parliament, is a powerful example of research and strategy together can be used as a tool for political influence. It brings together policymakers, the financial services sector, and the lived experiences of those navigating financial exclusion. While borrowers typically took out hundreds of pounds at a time, debts averaged around £3,000, with repayment often doubling the original amount – amid coercion, a lack of transparency, and little recourse to enforcement bodies.

What we discovered

With millions of households unable to access fair credit, the findings point to a growing credit vacuum and a resurgence of unregulated lending practices. This report sets out seven recommendations to drive urgent reform and expand access to safe, affordable credit alternatives across the UK.

While users of illegal moneylenders generally borrowed hundreds rather than thousands of pounds at a time, the total amount of debt per borrower was significant at around £3,000 on average. Repayment rates were different but invariably involved paying double. However, a lack of transparency or awareness of the total cost of credit was commonly reported.

With increasing numbers of people struggling through the cost of living crisis, illegal moneylenders appear to have moved upmarket, targeting lower-income workers with a median customer income of £20,000 – £24,999. This group is better off than the poorest fifth of the population and may not have considered this option until recently.

Researchers found that although actual violence was rare, the pervasive threat of it along with coercive control tactics were common.

There was also evidence of former collectors for now defunct home credit businesses continuing their operations without regulatory oversight, in a practice known as parallel lending.

Researchers detected a resignation to the idea of resorting to an illegal lender, as reflected by just 1% of customers in the research reporting their situation to illegal moneylending teams around the UK. Indeed, many were phlegmatic about it: ‘He’s just the money man.’

Why this is important

Joseph Rowntree Foundation recently reported 2.8 million low income households having been declined lending between May 2021 and May 2023 which appears to highlight a growing credit vacuum for lower income households.

We’re concerned that illegal moneylending could be a growing problem as more households struggle to access credit to help them manage life events and meet unexpected costs.

The report presents seven recommendations for policy reform to accelerate people’s access to fair credit from both commercial and community finance providers, to introduce a credit broking exemption to third sector organisations and to further resource the Illegal Money Lending Teams.

This research is a strong example of how meaningful, inclusive inquiry can help drive positive change. At .. for good, we are proud to spotlight this important work and remain committed to supporting approaches that put people, their stories, and their wellbeing at the centre of change. If you would like to read the full report, you can download it HERE.