Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

On section 19, I have been raising the issue of high-interest loans and moneylenders. I tabled my own legislation on this and had the Government bring in some measures in this area. There was a lot of work done by a number of individuals regarding moneylenders and trying to encourage people not to use high-interest loans and instead use some of the other lower-interest loans that are available, including from the credit union. There was a paper done on this issue by UCC academics in 2017, commissioned by the Social Finance Foundation SFF, titled "Interest Rate Restrictions on Credit for Low-income Borrowers". Among the recommendations was this:

In consultation with the credit union sector, the Department of Finance consider increasing the 1% monthly cap on interest rates for credit unions as per Section 38 (1)(a) of the Credit Union Act, 1997, for this type of lending to cater for the significantly greater costs associated with such small lending.

The academic argued two things. First, they said high-interest loans that were being charged by moneylenders at the time were not appropriate, to say the least, and that there should be a cap introduced on them; and second, that we needed to look at the fact that the only cap that applies to interest rates in this State is on credit unions. There is no other cap on moneylenders. There has been a cap on moneylenders in recent years but before this there was not. They argued that the cap on credit unions needs to be looked at again because it was 1% monthly and 12% per annum. Anybody who has paid 12% interest on a car or a holiday knows it is a lot of interest. People should not be paying that and credit unions do not charge that, in the main. If offering a short-term loan, a 1% rate may be challenging for a credit union because of the cost of the loan in the first instance. That is why they argue it should be increased.

I support this section but it allows for the Minister for Finance to set interest rates. It would be an enabling section to allow the Minister to provide an increase in this rate. While I support the increase in this rate in the context of moneylending, we also need to be conscious that a lot of people are using credit unions and the last thing they want to see is their loans going up for normal duties. I do not believe the appetite is there within the credit union movement to do that anyway. Therefore, there have to be safeguards.

In this section, which is enabling legislation allowing for the Minister to set a maximum rate that credit unions can charge on a product, what recourse does that have to the Dáil or to any oversight or scrutiny? It was stated by a previous Minister for Finance, because this issue has been ongoing now for half a decade if not more, that this would be done by primary legislation. It is not being done by primary legislation. This is an enabling provision in primary legislation. That is fine but what is the oversight on this, which is a really important matter in terms of a Minister for Finance in the future increasing the rate from 1% to 5%, for example? I am not saying anybody would but there has to be some oversight. If the Minister of State would not mind, I ask her to talk us through the implications of that section and what oversight, if any, is contained within the section in terms of the Oireachtas.