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.