Seán Fleming (Laois-Offaly, Fianna Fail)
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I thank the Deputy for his proposed amendment. I know that Deputy Doherty has a great interest in this legislation and I can see where he is coming from with his proposal. Lower interest rates are better for consumers. The key purpose of this legislation is to reduce interest rates. Deputy Doherty will say that Government is not being ambitious enough, but we have to strike a balance and reduce rates without reducing access to credit. We can reduce rates right down but we might not have any companies providing credit if it is not viable from their point of view. We want to make sure that the people we are talking about have access to credit. If we make it unviable for providers, then people will not have access to credit except through the illegal moneylenders that we all want them to avoid. There is a balance to be struck between reducing the rate and making sure that we keep lenders in the market. We are looking at a substantial reduction from where we were previously. We need to do this in a balanced, responsible way.

There is currently a concentration of loan offerings between 1% and 1.2% per week in the market. Most of the loans tend to be in that bracket. An initial interest rate cap of 1% per week will allow moneylenders operating at rates above the limit to revise their business model and reduce their margins to enable them to operate within the legislative cap. This is not the ultimate destination but it is the right place to start. The legislation also sets down the principles and policies to guide the Minister when making regulations to set the specific caps going forward. This provides flexibility to amend the caps downwards while ensuring that there is always an upper limit in the primary legislation. We are starting with 1% but the legislation specifically allows for that cap to be reduced. It cannot go above 1%, but it can be reduced. What we are saying is that at the point of introducing this legislation, we want the rate to be 1% but we are not precluding, after a couple of years when the Central Bank has monitored its operation closely, reducing that further. That is provided for in the Bill.

Deputy Doherty's proposal is to have the reduced rate now, but I would be fearful that if we go too low too quickly this will lead to fewer people offering credit. Furthermore, to fix the reduction in primary legislation without any assessment by the Central Bank of how the legislation is operating would not be good practice. We are starting with 1% per week, with the commitment that it can be reviewed when we get some information from the Central Bank as to how this is operating. It may be appropriate to reduce the rate at that stage. This is a maximum cap and represents a reasonable and balanced approach. I understand where Deputy Doherty is coming from, but we are clear about the way we want to do this. It is a very big step from where we are to go down to 1%, with the option of going further at a later date, on foot of information from the Central Bank, without the need to revisit the primary legislation