Call for money lender rate cap

THE Government should cap interest rates for money lenders in a bid to stop ordinary people falling even further into debt, it was claimed yesterday.

The call came as the Irish League of Credit Unions launched a national “anti-money lenders” campaign in conjunction with the Money Advice and Budgeting Service.

Building on a pilot project along the same lines last year untitled Keep the wolves from the door this Christmas, the league said it would be using posters and leaflets to advise people that credit unions could help people with debt problems.

League president Uel Adair said people were particularly vulnerable to what he called the “easy money promises of money lenders” in the run-up to Christmas.

He called on the Government to tackle the issue by following the example of other countries such as Poland and capping interest rates for money lenders at five times the prime rate, claiming: “People are legally being charged up to 118.5% interest on such loans by legal money lenders and even worse by illegal money lenders.”

The league unveiled a Christmas survival guide as part of the campaign, featuring tips to maximise family shopping budgets and how to keep a lid on their spending.

Minister for Social and Family Affairs Martin Cullen attended the launch and said he would look at the issue of a cap on interest rates for money lenders.

However, he added that it was primarily an issue for the Financial Regulator.

Latest figures, compiled in December 2005 by the Centre for Co-Operative Studies at University College Cork, showed that lone parents in particular used the services of money lenders, while 39% of people in a survey were currently borrowing from money lenders.