Lending firms complying with new rules

NEW findings from the Central Bank show that independent moneylenders are complying with recently introduced regulations, despite the fact that the annual percentage rates (APRs) being charged by most are well in excess of 100%.

There are 46 registered independent money-lending companies here (these are independent companies, as opposed to the likes of banks, mortgage providers and credit unions). While regulatory terms differ for each, none are lending above their maximum APR level. However, 63% of lenders have a maximum APR threshold of over 100%.

The latest set of Central Bank inspections found “a high level of compliance” amongst firms, with charges and licences fully displayed.

“The introduction of the Moneylender’s Code in 2009 has led to greater consumer protection in this sector, with the introduction of a number of new measures specific to the moneylending sector — including requirements that lenders disclose the high cost nature of the credit being advanced. They must also provide consumers, who demonstrate difficulty in meeting their repayments, with information on debt counselling services,” the Central Bank said.

However, it warned consumers that “other sources of credit should be considered if consumers are using short-term, high cost loans to fund long-term borrowing needs.”

The Consumers’ Association of Ireland (CAI) seconded this view, yesterday.

“While these companies are fully regulated, they do — in some cases — charge exorbitant rates, and that; unfortunately; is just the reality of the situation. The other reality is that for many people moneylending companies — outside of the banks, building societies and credit unions — are increasingly becoming their only option.

“We would stress that these companies should be short-term solutions for borrowers as people could not afford to borrow from them on a long-term basis, given their rates. Beyond the existing regulation, nothing can be done to drive down those rates, as that could equate to price fixing,” said CAI chief executive, Dermot Jewell.