Legal credit loans companies could face legal crackdown

A CRACKDOWN on legal credit loans sharks charging customers excessively high interest rates was signalled last night by social and family affairs minister Seamus Brennan.

The minister expressed alarm at the level of personal debt being built up as more than 10,000 people who turned for help to the State’s confidential Money Advice and Budgeting Service this year exposed the scale of the problem.

On average they owed almost €6,400 and paid legal interest averaging over 20% and as high as 39% in a number of cases.

The people in debt were mostly 26 to 40-year-olds, one quarter were single while a further quarter were single with children.

The scale of the debt prompted the St Vincent de Paul Society to warn card customers who pay the minimum on their bills that they end up servicing “outrageously” high rates.

The charity also criticised the prominence given on credit card bills to the minimum payment credit customers must make.

Mr Brennan said legislation may be necessary and “a suitable way” to curb finance houses charging what appeared to be excessively high rates to vulnerable people.

The minister announced he had instructed his officials drawing up new legislation to get legal advice on how to curb/ban such rates.

An Irish Bankers’ Federation spokesman said it was not convinced the billing methods employed by credit card companies contribute to individual debt problems.