Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move amendment No. 2:

In page 3, between lines 12 and 13, to insert the following: “Amendment of section 102 of Consumer Credit Act 1995

2. Section 102 of the Consumer Credit Act 1995 is amended by the substitution of the

following subsection for subsection (1):

“(1) A moneylender shall not make or attempt to make an agreement with a borrower who has borrowed or intends to borrow credit from that moneylender for any sum, account of costs, charges or expenses incidental to or relating to the negotiations of, or the granting of, the loan.”.”.

The amendment abolishes collection charges by adding to the list of charges that moneylenders are prohibited from charging. It amends section 102(1), which currently provides:

A moneylender shall not make or attempt to make an agreement with a borrower who has borrowed or intends to borrow credit from that moneylender for any sum (other than a collection charge), account of costs, charges or expenses incidental to or relating to the negotiations for, or the granting of, the loan.

Basically, the amendment takes the words "other than a collection charge" out of the original text. The amendment to abolish a collection charge in moneylending agreements is made in response to concerns and recommendations of stakeholders prior to and during pre-legislative scrutiny of the Bill in November 2020. For example, in their submission and opening statement during pre-legislative scrutiny, Dr. Olive McCarthy and Dr. Noreen Byrne recommended that any interest rate restriction be coupled with a limit on other fees and charge to avoid circumvention through other or higher fees and charges. In her opening statement, Dr. McCarthy noted that although the highest rate currently being charged by moneylenders is 187% APR, collection charges can increase the cost of credit to 287% APR. Similarly, in its opening statement during pre-legislative scrutiny the Social Finance Foundation, which has done a significant amount of work in this area, recommended that imposing a cap on interest rates charged by moneylenders be coupled with the prohibition of fees and charges. The amendment acts on these recommendations made in November 2020 by prohibiting collection charges under a moneylending agreement.

As a footnote, I recognise the legislation brought forward by the Minister also incorporated the recommendation that arose during the scrutiny of this legislation in that Bill as published.