Plan to restrict money loans

Plan to restrict money loans

By Pádraig Hoare

The Central Bank has said it wants to restrict targeted advertising and unprompted contact by moneylenders, as well as ordering the firms to tell customers about to borrow that they should consider alternatives.

The watchdog said it was seeking feedback from consumers to propose new protection measures for customers of licensed moneylenders.

As part of its review, the Central Bank said that it proposed restricting the promotion of moneylending by targeted advertising or unsolicited contact, as well as requiring moneylenders to prompt consumers at relevant pre-contractual points that they should consider cheaper options.

It also proposed unspecified “heightened protection” for consumers using money-lending loans to pay for accommodation, food, electricity, heating and other immediate costs.

Rates charged by money- lenders are often exorbitant compared to traditional lenders like banks and credit unions. They charge a high-interest rate because these personal loans are unsecured, according to the Money Advice and Budgeting Service (Mabs).

Many moneylenders also offer a door-to-door collections service.

During the Christmas period, one of the largest licenced firms, Provident, offered loans of €100 to €600 to be repaid over 12 months at an APR of 187.2%.

There are currently 39 licensed moneylenders, down from 52 in 2003 when the Central Bank assumed regulatory responsibility, according to the watchdog.

In 2017, the outstanding loan amounts were around €153m, compared to €198m in 2013.

Total loans in 2017 were about €268m, compared to €301m in 2013.

Some moneylending firms have more than 100,000 customers, according to the Central Bank.

The watchdog said other measures it wanted to introduce were specific limits on how much of a consumer’s income can be devoted to paying off high- cost moneylending agreements, as well as further training on customer engagement from money-lending firms.

It called for more engagement with organisations such as Mabs.

Director of consumer protection Gráinne McEvoy said there is “already a strong framework of protection” in place for consumers of licensed money lenders.

“The measures we are consulting on aim to enhance this consumer protection framework further,” she said.

More in this Section

One in four planning Christmas shopping trip outside state - AAOne in four planning Christmas shopping trip outside state - AA

Tech firm Horizon8 picks Cork as Europe HQTech firm Horizon8 picks Cork as Europe HQ

Abbey eyes more Irish work as profits fallAbbey eyes more Irish work as profits fall

Providence shares see bounce on Tony O’Reilly exitProvidence shares see bounce on Tony O’Reilly exit


Lifestyle

Overshadowed by its giant neighbours it may be, but the smallest of the main Blasket islands, Beginish, is no less impressive in its own right.The Islands of Ireland: The miracle of Beginish

‘The days of our years are threescore years and ten — Psalm 90How to tell an animal’s age in a heartbeat

We often hear how nature will do well, even come back from the brink of extinction, if given a chance and some human help.Birds of prey on the rise

In our country we still have places that bear no evidence of disturbance by man, that are in their pristine state and rich with all the elements that feed the spirit and deliver us into the world beyond the skin of the time and circumstances we live in.Unique ambience of Dursey Island under threat

More From The Irish Examiner