TDs push to repel ‘invasion’ of payday lending firms

Central Bank chiefs are to be urged by TDs to combat a “British invasion” of payday lending firms who “crucify” vulnerable borrowers with interest rates of up to 5,836% for short-term loans.

Ireland’s top banker, Patrick Honohan, is to appear before the Dáil’s influential finance committee tomorrow to discuss the problem after the aggressive hard sell of such lenders became a major political scandal in Britain.

With controversial British firms believed to be eyeing up a move into the lucrative Irish market, committee chairman Ciarán Lynch has warned the Central Bank governor to move to protect people tempted by easily available loans that come with a huge interest rate.

The latest Central Bank figures showed that 360,000 people have borrowed high cost loans from licensed moneylenders, which represents a surge of 20% since before the financial crash in 2007.

That change came despite the number of licensed moneylenders, who provide credit to consumers where the interest rate or APR is more than 23%, falling from 47 to 40 in the same period.

Mr Lynch says regulators must be ready for any push into Ireland by hardcore British payday lenders.

“The Central Bank need to explain how they are going to deal with the situation. In recent years we have seen the arrival of payday lenders on the British high street offering short term loans with exorbitant interest rates.

“They have taken advantage of vulnerable people who are not able to gain credit from regular lenders.”

The Cork TD said he is aware of cases where people have been locked into interest rates in the hundreds of percentage points, and would fear a situation developing where those in the thousands were available.