Pearse Doherty (Donegal South West, Sinn Fein)

Faoin reachtaíocht atá ann san am i láthair níl treoir ar bith leis an ús a bfhuil iasachtóirí ceadaithe a bhaint. Tá cuid des na hiasachtóirí ag baint rátaí bliantúla de 210%. Cén polaiteoir, Teachta Dála nó Aire a bhéádh sásta glacadh le táilli chomh hard seo dá mbeimís féin ag tógáil iasachta? Tá a fhios againn go bhfuil teaghlaigh ag strachailt leis an chostas maireachtála atá ag ardú go leanúnach, le méadaithe ar cháin agus ar tháillí agus le cailliúint ioncaim. Tá siad fágtha gan rogha ar bith ach iasachtaí ar chostas árd a thabhairt amach chun billí a íoc ó sheachtain go seachtain. De réir staidéir atá déanta ag Conradh na hÉireann de Chomhair Chreidmheasa, tá 10% de theaghlaigh ag iompú chuig iasachtóiri le billí tí a íoc. Tá cuid des na hiasachtóirí seo ag éirí saibhir ar dhroim theaghlaigh atá faoi chruatán. Ní tharlódh seo murab é go bhfuil an Rialtas ag ligint do rátaí ollmhóra úis tarlú.

Throughout the State low and middle income families are struggling to get by. As each month passes the recession bites deeper and deeper. Unemployment, wage cuts, tax increases, the household charge, cuts to rent supplement and rising mortgage distress are pushing more and more families into severe financial hardship. Hundreds of thousands of people are turning to moneylenders to make ends meet. Only recently I spoke to a constituent who had turned to moneylenders to pay basic household bills while waiting for a social welfare claim to be processed. The interest rates she had to pay on the loan put her into significant financial hardship but since it took several months to process her social welfare claim she took the view that she simply had no choice.

According to Social Justice Ireland, the State's poorest families experienced a disposable income drop of almost 18.7% in 2000 alone. We know that families are having to make impossible decisions on a daily basis, such as whether to pay the gas and electricity bills or pay the mortgage. Faced with these impossible choices, many are getting into even greater levels of debt simply to get by.

The What's Left Tracker 2012, published last week by the Irish League of Credit Unions, provides a graphic picture of the human face behind these figures. The report stated that 1.8 million families are left with €100 or less each month after bills are paid, some 25% of credit card holders rely on their credit cards to make ends meet each month and 40% of people have borrowed to pay household bills in the past 12 months. Astonishingly, 10% of people are using moneylenders. Incredibly, there is no cap on the rates of interest that moneylenders licensed in this State can charge.

Some 46 licensed moneylenders operate in the State and according to some figures they provide credit to more than 300,000 people. Much of this credit takes the form of short-term loans, often offered at high interest rates. Under existing legislation there is no cap on interest charged by licensed moneylenders. Some lenders charge an annual percentage rate, APR, of up to 210%. I have one question for every Member and Minister while we are dealing with this Bill. Can they stand over the imposition of such charges, especially on the poorest in society, who believe they have no option but to go to these lenders? The only reason these lenders can charge such excessive rates is that the House has not yet placed a cap on interest rates. As a result of the inaction of the Oireachtas over many years some lenders are, without doubt, getting rich on the back of hard-pressed families.

Let us consider the position throughout the European Union. Many EU member states operate interest rate caps on licensed moneylenders. A 2010 European Commission study identified 13 states that operated such a cap. These included Belgium, where the cap ranges from 10% to 19.5% APR, France, where the range is from 5.7% to 21.6% APR, and Spain, where the rate cap is 10% APR. In these and other states politicians have already decided there is a limit to the amount of interest licensed moneylenders can charge, especially when lending to low income families struggling under the weight of household debt.

The Bill tabled by Sinn Féin seeks to bring this State into line with our EU counterparts. Of the 46 moneylenders with licences in this State, 29 charge an APR of more than 100% while 14 charge more than 150% APR. One moneylender charges an APR of 210%. This means it would cost a person who goes to that moneylender and takes out a €500 loan for his family, who may be struggling to pay the bills and get by, a total of €186 if the loan were for six months and €375 if the loan were for 12 months. Given that loans of the same amount from the Credit Union would cost the same family €13 and €25 respectively, there is no justification for this vast mark-up. Such excessive interest rates push hard-pressed families further into financial stress and poverty. It is a vicious cycle and we all know it. There is no moral or economic justification for the absence of a cap on interest rates charges by licensed moneylenders.

The Bill under discussion proposes a cap of 40% APR. This would mean that while some moneylenders would be required to charge less, no lender could breach the 40% cap. What would this mean for the family to which I referred earlier, a member of which went to a moneylender for €500? At a maximum that struggling family would have paid €50 for a loan for six months or €97 for 12 months. This is a fairer level for customers and it would also allow licensed moneylenders to operate on a sound commercial basis.

Some licensed moneylenders in EU member states are significant businesses. The largest moneylender in this State is an organisation called Provident. Bloomberg reported recently that Provident is set to make €1.3 billion in profits next year from its operations in Ireland and other member states.

In 2006 the Polish Government introduced a cap of 20% on licensed moneylenders. As in Ireland, Provident is one of the largest moneylenders in the market in Poland. It has continued to trade profitably in Poland even after the introduction of a cap. An APR of 20% is the maximum charge in Poland whereas in this State the largest moneylender can charge a rate of 187%. It is no wonder the company is set to make €1.3 billion in profits globally. If the Government supports the principle of a cap but is unsure about the figure of 40%, I call on Government Members to let this Bill pass to Committee Stage. At that stage we could tease out the finer details and determine the appropriate level to ensure that moneylenders can continue to exist but people are not being fleeced at the same time. Sinn Féin is open to discussing the level of the cap but of greater importance to the party is that over the course of the debate the Government accepts the notion that there should be a reduction in the APR charged and that we need to follow the example of other European countries and introduce a cap. There is an urgent need for Government to introduce a cap on interest rates and there is also a need for a wide-ranging reform of the regulation of licensed moneylenders and the policing of illegal loan sharks. Last month the Minister for Justice and Equality, Deputy Shatter, in a reply to my party colleague, Deputy Stanley, confirmed there is no record of a successful prosecution for illegal money lending in the past seven years. Clearly, there is something wrong and that also needs to be reformed.

Earlier this month I asked the Minister for Finance to consider the issue of an interest rate cap on moneylenders as part of a broader reform of the regulation of licensed moneylenders. He stated that he had no plans to amend the existing regime and he quoted a 2007 research paper from the Central Bank which stated that a cap might not reduce the total cost of credit. I have read that piece of research to which he referred and its conclusion is not based on any empirical evidence. It took two similar loans with different APRs and different durations and from that comparison alone, it drew its conclusion. This is not a sufficient basis for making such an important policy decision.

Níl sa leasú atá molta sa Bhille seo romhainn ach leasú macánta. Is féidir go cinnte le gach Teachta tacaíocht a thabhairt don leasú. Má chuirtear an leasú seo i ndlí, beidh tionchar láidir aige ar an gcruatan airgid atá á fhulaingt ag na céadta mílte teaghlaigh, atá faoi ualach trom. Déanfaidh an leasú seo an saol níos fearr do líon mór daoine ag am nuair atá cuid mhór den tsaoil buailte ar dhrocham agus ar chruatan.

The amendment contained in this Bill is modest. It does not pretend to be anything otherwise. However, it is an amendment that I hope every Deputy in this House can support. It is also an amendment that, if put into law, would have an immediate impact on the financial hardship experienced by tens, if not hundreds, of thousands of hard-pressed families. It is an amendment that would make life better for a large number of people at a time when so much of their lives have been hit with bad news. It is an amendment that is being tabled in the genuine hope it can get cross-party support.

I sincerely hope there is no Deputy in this House who believes it is right or just to charge APRs of 150% or 210%, as is currently happening, on loans, especially those taken out to pay essential household bills. I urge the Minister and Deputies from all parties to stand together and support this Bill. It will not solve the burden of household debt but it will make a real and tangible difference to many of the most financially distressed families in the State.

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