Mr. Bernard Sheridan:

All of my references are to licensed moneylenders.

Other factors relevant to this issue are the robustness of the creditworthiness assessments carried out by moneylenders, a topic on which we have given firms feedback previously, and the continued availability of credit for existing customers. It is especially important in such a high-cost sector, where over a quarter of borrowers surveyed cite ease of availability of moneylender credit as a key factor in their choice of a moneylender over another type of credit provider, that lenders have effective systems in place to assess the ability of the borrower to repay. This is all the more important in a context in which a quarter of those surveyed had found it difficult to make moneylender repayments in the previous 18 months, and this overall figure will be higher in some moneylender sectors.

The research found that more customers hold longer-standing loan arrangements of five years or more with a moneylender. While there may be circumstances in which a customer needs an additional loan, we would be concerned a new loan is simply a way of extending an existing loan whereby the credit becomes longer-term in nature but is charged on the basis that it is short-term. It may also become more difficult for the borrower to consider alternative sources of credit. Concerns have also arisen through our supervisory work as well as from the research that some moneylenders may make credit available but reduce the amount of a new loan made available to the customer in order to repay an existing loan. This is an issue we will examine further.

I thank the committee for its invitation to discuss this important topic. In regulating licensed moneylenders the Central Bank’s focus is on the protection of borrowers’ interests. While we believe we achieve this through the regulatory framework we have put in place and our ongoing monitoring of the sector, we continue to be vigilant about the sector’s trends and will develop our supervisory approach accordingly. I am happy to take any questions.