Loan sharks linked to dissident republicans are forcing some victims to store weapons, it has been claimed.
It has also been claimed that on one occasion a victim had to hand over a car when they were unable to re-pay money.
Foyle MP Colum Eastwood said he has been approached by a significant number of people who have been faced with “intimidation, theft and threats” because they were unable to pay back money borrowed with excessive interest rates.
Police confirmed that two arrests have been made and four “proactive searches” carried out in connection with illegal money lending in the north west in recent weeks.
It is not known if the arrests were linked to dissident republican groups.
The SDLP said loan sharks with links to different dissident groups have been exerting pressure on victims and, on occasions, have used outstanding debts to force people to store weapons and other materials.
The party said: “People are telling us that when they get into debt they can’t repay, the loan sharks are telling them if you cannot pay us back, you or your property may be of use to us.”
On one occasion, a man who borrowed £1,000 was forced to hand over his car when he was unable to pay the money back at exorbitant interest rates.
He also still has the loan outstanding.
It is claimed that illegal money lenders are preying on vulnerable people, particularly in areas of high unemployment and social deprivation.
The SDLP has recorded a major increase in the number of victims in recent months. The party understands the money lenders’ links to dissident republicans was “open knowledge” in some parts of Derry.
Mr Eastwood said: “I have been approached by a significant number of people who are reporting that dissident-linked loan sharks have been pressuring vulnerable people in Derry. These people will take any opportunity to intimidate, threaten and draw others into criminality.”
He described the rise in people in debt to the money lenders as a “worrying development” and appealed to people who found themselves in difficult situations not to turn to “criminals” for help.
“These people will make your life a misery if you can’t pay them back and they make it their mission to make sure you can’t pay them back in full.
“If you are finding things difficult, please reach out to advice services, charities or my office for additional support. There are people in the city who are here to help you and want to support you and your family,” Mr Eastwood said.
The Foyle MP said he intends raising the “worrying trend” with police.
“We have already received reports of intimidation, theft and threats against people who have taken money from these people,” Mr Eastwood said.
Derry and Strabane police chief, Superintendent William Calderwood said some people were manipulated by illegal lenders in the run-up to Christmas.
He said: “Predatory money lending - whether from individuals, organised crime groups or paramilitary groups - is illegal.”
He said people who turned to loan sharks faced “hefty” interest rates on repayments and found themselves in a “terrifying cycle of debt and fear”.
While police have made arrests in recent weeks, illegal money lending crime often went unreported.
“Victims with unpaid debts, and indeed their loved ones, are exploited and often forced to repay by other means such as storing or selling drugs,” Mr Calderwood said.
