Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I thank the Vice Chairman. It is to be hoped there will be no more technical difficulties. It is frustrating that we cannot have these meetings in Leinster House given all of the technical difficulties we are having.

I welcome the witnesses to the committee and appreciate, not for the first time, their time and input on this Bill and the wider issue of moneylending. I welcome Mr. Farrell, CEO of the ILCU; Ms O'Connor, business manager, from MABS, and her colleagues; and the Free Legal Advice Centre, especially Mr. Joyce who is a regular attendee at these committees on various subject matters.

I thank the witnesses for their opening statements and submissions on the Consumer Credit (Amendment) Bill which I introduced in 2018. A previous version of the Bill was published a number of years ago. I want to begin, as the Vice Chairman said, by drawing attention to a submission I made on behalf of Sinn Féin to the committee regarding the Bill. I understand it has been shared by the Vice Chairman.

The objective of the Bill is to end what I believe is the immoral status quo which permits moneylenders to charge interest rates of 187%, or up to 280% when charges are included. The Bill seeks to end that by capping the interest rates moneylenders can charge. It is very welcome that key stakeholders, such as St. Vincent de Paul, MABS, the Social Finance Foundation, the ILCU, academics and UCC, are involved.

We have a report from 2018. Others, including the witnesses before us, have supported the objectives of this Bill. I have listened carefully over the past number of months to submissions and opinions from all of the stakeholders in the committee and those that have engaged with me. My submission proposes to amend and improve the Bill if it is to progress to Committee Stage, which I hope it will. It should be, given the moral imperative at stake.

I have made a submission to the committee and have attached an addendum to that which lays out the pre-legislative change I seek. The proposed amendment would move from an absolute cap based on APR to a relative cap based on the total cost of credit. This would put in place a restriction whereby the total cost of credit charged by moneylenders, including fees and charges, could not cost more than three times the market average. The Central Bank would govern this cap by way of regulation. I note Mr. Joyce's comments on my request from the Central Bank for some of the data on what is on the market at the moment. We have not received that as a committee, but I understand it will come to us within the next week.

The Central Bank would govern the cap by way of regulations, with the market average calculated through information gathered from credit institutions and credit unions. It would also be, under the amendment I propose, phased in over a three-year timeframe, allowing for a smooth transition as recommended by a number of stakeholders. Others may have a view in terms of the timeframe, but that is what I am proposing.

Other provisions of the proposed amendment would require the Central Bank to assess the interest rate restriction and make recommendations periodically to the Minister for Finance so that he or she can develop regulations to restrict interest rates further, as appropriate. I hope committee members will consider my submission and the proposed amendment, and do what I believe is the right thing as a committee by progressing the Bill to Committee Stage after we have completed the legislative scrutiny. That is my piece regarding this submission. I have made a submission which the committee has agreed to accept.

In his opening statement, Mr. Farrell restated the support of the ILCU for the principle of the Bill and its proposal to cap the amount of APR to be charged at 36%. While I have said that I propose to move from an absolute cap based on APR to a relative cap based on the total cost of credit, I welcome the fact that the credit union movement supports this Bill.

In the marketplace, for a 12-month loan of €1,000 a typical credit union would charge €62 in interest while a moneylender could charge €560. Can Mr. Farrell comment on his view on this difference, ethically and in terms of cost it imposes on borrowers? To tell the truth, if there is one message I want to get out from this committee it is exactly that. If people go to a credit union it will charge, on average, €62 to borrow €1,000. People who go to a moneylender will be charged up to €560. A wise person will make a journey to a local credit union.