Calls For Cap & Warnings About High Loan Rates

A Sinn Fein TD has called for a cap on moneylending interest rates amid demands for high-cost loan warnings to be displayed on all advertising.

It comes as a Department of Finance consultation on the matter draws to a close.

Sinn Féin spokesperson on Finance Pearse Doherty said there is an urgent need to cap the rates charged by licensed lenders, as many citizens have no choice but to apply for a loan. An estimated 33,000 people have used money lenders in Ireland.

Teachta Doherty said: "Financial challenges - particular at this time of year with increasing back to school costs - means that that many families are often forced to resort to borrowing money to make ends meet; from banks, from friends, from family members or from Credit Unions.

"For some people, that is not an option and they must resort to borrowing money from moneylenders and loan sharks, who in many cases are unlicensed and charge punitive and quite frankly disgusting interest rates. Currently, even licensed moneylenders are permitted to charge 187% interest by the Central Bank and when collection charges are added in that rises to 287% APR.

"This affects an estimated 330,000 people who are forced to borrow from moneylenders - 7% of the entire population of the State."

A Bill introduced to cap interest rates at 36% was previously passed by the Dáil but failed to make it into law.

"It is high time the government acted on this issue and moved urgently to cap the interest rates that licensed moneylenders are permitted to charge," Deputy Doherty added. "With the necessary political will, there is no reason why legislation can't be place to ensure this Christmas is a moneylender free one for many families."

Meanwhile, the Society of St Vincent de Paul wants to see all loan companies display a tobacco-style warning on their merchandise.

Moneylenders must provide information about the cost of loans to their customers, typically in the lending agreement, but it is not required in advertisements.

In a submission to the consultation, the society said that "Warning: This is a high cost loan" should be on all moneylending advertisements and literature.

It said the warning should also point out that alternatives to high cost loan offerings may be available and that people should check their options before borrowing.


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