We aim to list only lenders authorised by the Financial Conduct Authority (FCA) – that’s a baseline, not a nice-to-have. Authorisation status can change, so before applying with any lender, it’s worth taking a moment to confirm their current status and correct contact details yourself on the FCA Register. Outside that regulated market, illegal lenders (commonly called loan sharks) operate with none of the protections that come with FCA authorisation, and they specifically target people who feel they have no other option. Here’s how to recognise the warning signs and what your rights actually are if you’ve already borrowed from someone unauthorised.
The single most important check: is the lender authorised?
In the UK, a firm has to be authorised by the FCA to lend money legally. You can check any lender, free, in under a minute, using the FCA’s Financial Services Register at register.fca.org.uk – search the firm’s name or its Firm Reference Number (FRN), which should be quoted on their website and paperwork. A genuinely authorised firm will show as “Authorised” along with the specific activities it’s permitted to carry out. If a firm doesn’t appear on the Register at all, or the Register shows a warning against it, treat that as a hard stop. The FCA also warns that some illegal operators falsely claim to be a genuine authorised firm (known as “clone firms”) – so if in doubt, look up the contact details on the Register itself rather than trusting the number on the lender’s own website.
Warning signs that you may be dealing with an illegal lender
- No FCA authorisation – the check above should always be your first move, before anything else on this list.
- No formal paperwork – legitimate lenders are required to give you a clear written credit agreement. An illegal lender typically won’t, leaving you with no documented terms, interest rate or repayment schedule.
- Informal, cash-based arrangements – often operating from a private home or entirely by word of mouth, rather than through a registered business.
- Interest and fees with no stated structure – genuinely extortionate or constantly shifting charges, rather than a fixed rate set out in advance.
- Taking your bank card, benefit card or other valuables as “security” – a regulated lender has no basis to do this.
- Pressure, intimidation or threats if a payment is late – a hallmark of illegal lending that a regulated firm’s own conduct rules and FCA oversight are specifically designed to prevent.
If you’ve already borrowed from an illegal lender
This is the part that surprises most people: if you borrowed from someone who wasn’t FCA-authorised, you haven’t broken the law – they have. Money advice charities are consistent on this point, and it matters because fear of “getting in trouble” is one of the main reasons people stay trapped with a loan shark rather than seeking help. Free, confidential support is available from Citizens Advice and, in England, from the England Illegal Money Lending Team (24-hour helpline 0300 555 2222), which specifically investigates and prosecutes loan sharks and supports their victims – you don’t have to handle it alone or keep paying to avoid consequences that don’t actually apply to you. You can also report an illegal lender via GOV.UK.
Predatory practices that stop short of being illegal
Not every questionable practice comes from an unauthorised lender – some warning signs are worth watching for even with a regulated firm:
- Pressure to borrow more than you asked for, or to take out a second loan to cover a first one.
- Encouragement to roll over or extend a loan repeatedly rather than working out an affordable repayment plan – the FCA’s total cost cap (covered in our guide to the true cost of a cash advance) exists precisely to limit how far this can go for high-cost short-term credit, but it’s still worth being alert to it.
- A lender that doesn’t ask about your income and existing commitments at all – a proper affordability check is a regulatory requirement, not optional due diligence on their part.
- Being taken through the application so quickly there’s no real chance to read the credit agreement before signing.
None of these automatically mean a firm is acting illegally, but they’re reasons to slow down, check the Register, and read the actual agreement rather than the advert.
Compare only regulated options
Every provider on our compare options page is FCA-regulated short-term credit – that’s the starting filter for anything we list. Checking a lender’s status yourself, independently, on the official Register takes a minute and costs nothing, and it’s worth doing even for a firm you found through a comparison site, this one included.
Sources: FCA – How to check a firm or individual is authorised; FCA – Financial Services Register; MoneyHelper – Illegal lending: how to spot a loan shark; Citizens Advice – Loan sharks; England Illegal Money Lending Team – who we are; GOV.UK – Report a loan shark.