Issues found with ‘small number’ of moneylenders

A Central Bank investigation into the practices of moneylenders has found some serious issues in a small number of them.

The regulator carried out themed inspections focusing on whether consumers were being charged in accordance with moneylenders’ authorised annual percentage rates and costs of credit as set out in the moneylenders’ licence.

Director of consumer protection, Bernard Sheridan, said they were focusing in on this sector of the lending market as they provide the most expensive credit in the market.

“We continue to focus on the area of costs and charges in this sector due to the high cost nature of these loans,” he said.

“While the majority of firms inspected were broadly compliant we discovered some serious issues in a small number of firms which we are pursuing individually with the firms.”

The inspections were carried out in nine of the 43 licensed moneylenders operating in Ireland and for the most part the majority of the firms were compliant with the Consumer Protection Code for Licensed Moneylenders and the Consumer Credit Act.

Most of the companies that were targeted by the inspection are door-to-door lenders who operate by visiting borrowers homes to collect payments and offer loans.

The investigation found that the operation of a small number of firms may not be compliant with the legislation and the regulator is considering possible enforcement action against a small number of firms.

The vast majority of firms were compliant but some administrative errors and were identified and some firms did not have their license on display.

The more serious issues which arose fell outside of the scope of the Central Bank’s planned inspection. A case-by-case examination of files raised questions about how the lenders establish the credit worthiness of their clients and the nature of their interaction with borrowers.

“We also found cases where some consumers were provided with new loans before existing loans were repaid in full which is not necessarily in the consumers’ best interests,” said Mr Sheridan.

“Using short-term, high cost loans for longer-term needs should be avoided and I would encourage consumers in such a situation to contact Mabs for help and advice.”