Dr. Olive McCarthy:

We have Deputy, although it is sometimes difficult to access information on the impacts in that regard. If we look at the example in the UK, however, the Financial Conduct Authority, FCA, has been extremely active in this area. It introduced this cap on payday lending and not so much on home collection credit, and in the area of payday lending we are looking at interest rates in the thousands of per cent. The FCA has undertaken that initiative while also having a systematic approach to measuring the impacts and also reviewing the impact of the restriction every two to three years.

The website of the FCA is a really useful one for anyone listening today to look to get detailed information. The FCA also has a very proactive approach to measuring the impacts experienced, as well as conducting the aforementioned systematic and ongoing review of that interest rate restriction. There is a very interesting report on the FCA website from 2017, which surveyed high-interest rate customers. It looked at about 1,500 such customers who had been using such high-cost credit, and asked those people what they did now without access to such loans. Of the respondents, only two had turned to illegal moneylenders. The report found therefore that the rate at which people turned to illegal moneylending as a result of interest rate restrictions to be quite low in the UK.

I reiterate what I said in my opening statement concerning the argument about people turning to illegal moneylending avenues being seen as an unintended consequence of an interest rate restriction. To my mind, that argument has caused a bit of paralysis in the Irish context. We keep going back to that argument and using it as a reason to not make any changes and to just stick with the status quohere. The provision of legal high-cost lending is seen here as the lesser of two evils vis-à-visillegal moneylending. We have often just decided that it is better to leave the status quoas it and to not do any damage in this area.

Of course, that perspective is complicated by what the definition of "illegal moneylending" is, and it could be anything from a friend or a neighbour giving someone a loan of some money, right up to a scene from Hollywood movies involving with illegal moneylenders and people coming to front doors with baseball bats. What is also interesting from our perspective, however, is that we did some research with social housing residents in 2020. What was really noticeable was that we cannot just assume that because people have reduced or no access to legal moneylending that their default action will be to go to illegal moneylenders. People on low to moderate incomes are enormously resilient and can find all sorts of ways to meet their needs when necessary.

I am on the board of the Money Advice & Budgeting Service, MABS, and that organisation would also say that people are extraordinarily resilient and will find alternative ways of dealing with their situations. In a way, therefore, I think we should try to move on from this argument about illegal moneylending. It is important, however, if we do introduce an interest rate restriction here that we also put in place a method of systematically reviewing the impacts of any such measure, as has been done in the UK by the FCA. Perhaps such a review could be undertaken every year or two to ensure that any unintended consequences can be managed.