LEICESTER, England (Reuters) - Armed police shin up ladders to scale an imposing security fence and rush past palm trees to raid a sprawling mock-Tudor property in search of evidence.
The household in this English midlands city is clearly a very prosperous one. Police suspect this is the home of the boss of a illegal moneylending operation, surfing on Britain’s rising tide of debt and wrecking countless lives in the process.
The target was not at home at the time of the early-morning swoop, nor at the suspect’s ostensible business, a local garage, which was raided at the same time. Police said their search would continue.
The operation on Tuesday was the latest by the England Illegal Money Lending Team (IMLT), a Birmingham-based unit tasked with cracking down on loan sharks lending cash to vulnerable borrowers at exorbitant interest rates.
It’s not just a technical breach of financial regulations. “The debt is unenforceable in law, so the ways they make people pay can be extreme,” said Tony Quigley, head of the team.
“We have seen kidnapping, psychological intimidation, wounding and in one case, rape.”
Quigley told Reuters his team were conducting “a couple” of similar operations a week, and that he believed loan sharking was a problem in “most towns and cities across the country”.
“People can be unwilling to come forward because they are frightened and there is a stigma attached. But we need people to be brave and come forward. If you’re in the clutches of a loan shark, ring us and we will deal with it.”
Blue-gloved police involved in Tuesday’s raids seized documents, electronic devices and a large quantity of cash and jewellery that could prove the suspect’s links to a loan-shark operation they had been tracking for several months.
The size of Britain’s “below-the-radar” illegal loan business is hard to assess but police believe it is worth around 750 million pounds ($960 million) a year, Quigley said.
It ranges from small-scale lending via word-of-mouth introduction in housing estates and workplaces, to sophisticated schemes extracting payments through a network of contacts for years.
A court in March 2017 ordered a hospital consultant from northwest London to pay back 525,000 pounds in proceeds of his illegal lending scheme.
Dr Arjan Damjibhai Savani had preyed on members of the Filipino community working at the same hospital, his trial was told.
Such illegal lending comes on top of a growing 1.8 trillion-pound household debt pile in Britain that the Bank of England warned in June could pose a risk to the country’s financial stability, especially if the economy deteriorates after Brexit.
Legal high-cost lenders are under pressure. Britain’s biggest payday lender Wonga collapsed into administration last week, following a spike in compensation claims and a regulatory crackdown on its business model.
Wonga was the most high-profile of a group of high-interest, short-term lenders that sprang up in Britain in the wake of the 2008 financial crisis, whose marketing tactics and four-figure interest rates drew strong criticism from lawmakers.
Cuts to government benefits, stagnant wages and a reduction in banks’ willingness to lend to the poor have since the 2008 crisis pushed many households’ finances to the brink.
Unsecured borrowing such as credit card debt rose to a record 213 billion pounds in June.
The Bank of England in August pushed interest rates above their financial crisis lows, in a move debt advice charities said could further pressure overstretched household budgets.
Sky-high housing costs in parts of Britain are driving a rise in landlord lenders, Britain’s Financial Conduct Authority (FCA) said in a report last year on illegal lending.
Loan sharks trap desperate borrowers in debt indefinitely to guarantee an income stream, it said.
The IMLT unit said it funnelled money seized from loan sharks towards local credit unions in Britain, which offer lower-cost alternatives to both authorised and the illegal high-cost lenders.
The IMLT says it has written off more than 73 million pounds in debt owed to loan sharks since it was formed in 2004.
($1 = 0.7801 pounds)
Reporting by Lawrence White; editing by Sinead Cruise and Andrew Roche