Mr. Paul Joyce:

The point about the cost of credit is valid. As Deputy Ó Snodaigh has indicated, these are mainly licensed moneylenders; they would apply for a licence and state on the application what they intend to charge. If the State grants the licence, they can charge whatever is permitted in the licence. There is a question regarding the cost of credit being too high but Deputies will know that some people would use moneylenders routinely as their only source of credit. It can be a difficult question. The annual percentage rates are far too high.

The report also identifies that during the boom years, particularly from 2004 onwards, many sub-prime lenders - both mortgage and personal lenders - entered the market. There is an illustration of an agreement which we dealt with on page 7. I will spare the committee the details but it was a top-up loan, which licensed moneylenders are not allowed to charge for. It involved a credit institution from outside the country which came in by "passporting" on its banking licence. It offered a personal loan over seven years at an outrageous rate of interest, topped up the loan and loaned the borrower money for payment protection insurance, which was prepaid for the full duration of the agreement. It was absolutely scandalous and the cost of the credit was outrageous.

Such cases went by without any regulation. The institution was a credit body for the purposes of the consumer credit legislation and it could do as it wished. There is a gap in consumer credit legislation that means credit institutions do not have to get a licence to charge over 23% annual percentage rate, although moneylenders do. That is a simple change that could be made to the legislation tomorrow. During the course of the boom, certain business names of certain banks were offering credit agreements at over 23% annual percentage rate, and not just banks coming in from outside.

The report details that sub-prime lenders were authorised by statutory instrument to be housing lenders for the purposes of the consumer credit legislation, with no other controls placed upon them. They are responsible, although not alone, for many of the difficult arrears cases. They became retail credit firms in 2008. This is what is being proposed for the unregulated entities which have bought loans from others, and Deputies are aware of the consultation which has just finished with the Department of Finance. Legislation is due from that. We just do not seem to get there on time and we seem to be behind all the time in putting in place necessary protection.