Moneylenders set to face restrictions

UNCHECKED moneylenders who are asking for up to 180% interest rate are face restrictions under plans being discussed by the Department of Social and Family Affairs and the Financial Regulator.

Families struggling in the run-up to Christmas are being crippled by the enormous rates being asked by door-to-door lenders.

Minister Seamus Brennan says these amounts are “unacceptable” and his officials yesterday confirmed discussions were planned with the Financial Regulator to effect change.

The Financial Regulator has finished a study on moneylenders which will be released over the next month.

“It is with a view to looking at future policy,” said a spokeswoman for the regulator yesterday.

According to one Fianna Fáil councillor, families are being fleeced with no restrictions in place on how much approved lenders can charge.

“The Financial Regulator is responsible for granting or refusing licences to moneylenders, but the legislation does not set out any maximum limit for rates. It’s vital that we change that regime so that moneylenders, who cripple vulnerable, low-income families with enormous interest rates every Christmas are put out of business,” said Cork Dáil candidate Michael McGrath.

Up to 46 moneylenders are licensed by the Financial Regulator while many more are not licensed.

“One woman from a family borrowed €500 and had to pay back €1,000 over 12 months, a 100% increase, and this was perfectly legal,” added Cllr McGrath.

According to the Money Advice and Budgeting Service (MABS), it saw an extra 10,075 new clients this year. The largest number of these (52%) were between the ages of 26-40.

Those using moneylenders get some of the highest interest rates, said Michael Culloty with the support group’s social policy division yesterday.

Minister Brennan is understood to be currently seeking legal advice about amending the Consumer Credit Act 1995 to curtail or restrict rates charged.

During a speech in October, he signalled the days of charging excessive rates were over.

“In the midst of this era of a surging Celtic Tiger economy we still have an underbelly of serious debt in which those most vulnerable are being charged exorbitant repayment rates on loans because they are considered to be a risk.”