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St Vincent de Paul warns of 'potential money lending crisis'

The society has said that its members are becoming increasingly alarmed at the prevalence of money lenders.

THE SOCIETY OF St Vincent de Paul (SVP) has warned of a potential money lending crisis in Ireland.

It has now called on the Central Bank to publish baseline data to “take money lending out of the shadows”. Writing in the latest edition of the SVP magazine The Bulletin, Brendan Hennessy from the SVP Social Justice and Policy team said that SVP members are becoming “increasingly alarmed” at the prevalence of money lenders in the communities they serve.

Hennessy said that of particular concern to the SVP is that vulnerable households are being offered money by doorstep credit firms without sufficient background information being sought.

Hennessy said that the absence of data on the number of households using regulated money lenders in Ireland “significantly hampers any investigation or analysis on the extent and impact on doorstep credit in Irish society”.

The Central Bank should publish baseline data on the number of loans and the number of households with such loans and update the information on a six-monthly basis.

Contradiction

The SVP believes that there is a contradiction in permitting high cost loans, which it says are targeted at the most financially vulnerable.

A sample of typical loans from moneylenders published by the SVP shows that a loan of €1,400 repaid over 52 weeks results in a repayment of €2,184, making the cost of the loan €784.

If the loan was €2,000 over the same period the repayment would be €3,120, a massive €1,120 cost to the borrower.

SVP said that from what it has seen, borrowers from money lenders do not pay due attention to the interest rate. “Their focus is on the principle borrowed for a specific purpose,” it said, while at one Dublin SVP Conference members noted that “no one has ever either admitted or been able to tell us what the interest rate is.”

While low income is the key factor driving people to doorstep money lending, SVP said that people on low incomes “need low-cost solutions to their credit needs, not the exorbitant rates that characterises money lending”.

SVP is also concerned about the potential reduction in the availability of small loans from credit unions to households who are in mortgage difficulties with other institutions.

Read: 56pc of Irish homes ‘go into debt to pay essential bills’>

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