THE CENTRAL BANK has published a consultation paper proposing new measures it said will enhance the protection for people from moneylenders.
The measures include restricting the promotion of moneylending through advertising or unsolicited contact and a specific limit on how much of someone’s income can be devoted to paying off high cost moneylending agreements.
St Vincent de Paul welcomed the move from the Central Bank and that, “if properly enforced”, these rules will provide “much needed protection” to the hundreds of thousands of people who use moneylenders in Ireland.
Protection
The Central Bank’s director of consumer protection Grainne McEvoy said that what is being proposed would “ensure that customers are dealt with in a responsible and professional manner and are provided with targeted information to prompt [them] to consider alternatives to high-cost loans from moneylenders”.
It also proposes to:
In Irish law, moneylending is defined as credit where the APR interest rate is in excess of 23%. There are currently 39 licensed moneylenders in Ireland, with outstanding loan amounts of €153 million in 2017.
The total amount of loans advanced last year stood at €268 million, although the Central Bank said this number had fallen in recent years.
Pressure points
The St Vincent de Paul charity said that the provision to impose greater restrictions on advertising and unsolicited contact are “very welcome”, and said that moneylending is particularly prevalent in people from lower socio-economic backgrounds.
Its national president Kieran Stafford said: “The people that we are helping are on such low incomes that bills, utilities, and rising rents, have forced people to access money from lenders when they just can’t make up the difference themselves.
Pressure points like back to school, Christmas, Confirmations and Communions also put significant strain on low income families and feel they have no choice but to turn to moneylenders.
It is our experience that people tend to use moneylenders when they have limited access to other sources of credit and they may be worried about cutting themselves off by reporting abuses within the sector.
Stafford added that action was urgently needed to protect people from “predatory and exploitative” forms of credit that charge interest rates well in excess of 100%.
Submissions can be made on the consultation paper by sending an email to consumerprotectionpolicy@centralbank.ie, clearly labelled with subject title “Moneylending Regulations”.
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