Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

Moneylending is a risky business. The APR set for each individual moneylender, as specified by the Central Bank, takes in the risk, but it is not the case that everyone is defaulting. The fact that someone is calling to the person's door on a weekly basis is the encouragement to repay. These high interest rates occur because of the administration end and the fact that someone must call to the house every week to collect the money. That is the big problem and the reason some of the rates are so high. It is a hugely profitable business.

There is no point in looking at how this will affect moneylenders, because we know it will not affect them. Is there a way of capturing moneylenders - through a hybrid of the suggestions made by Deputy Michael McGrath and me - which is unique to moneylenders so that we do not put a burden on credit unions? I am not suggesting doing it now.

The Minister of State has indicated that the Minister has the power under section 11(7). My reading of the subsection is that the power extends to raising or varying the amount, or reviewing the rate, having regard to the changes in the consumer price index, CPI. It is written in a way that is supposed to reflect price changes. I am not sure it is written for the purpose of decreasing the rate. Scope may be provided to do that but, as I noted a moment ago, a different section may be required for moneylenders so that we do not put pressure on the likes of credit unions.

I am sure the Minister of State at the Department of Finance is well aware that as we impose restrictions and requirements on lending for financial institutions - credit unions in particular have had different lending caps imposed on them - some of these are very blunt instruments that do not take into account the individual borrower's circumstances. These blunt instruments mean that credit unions cannot lend above a certain amount. It is right that we ask credit unions to go to the register, but if I ask my credit union for a €2,000 loan it may find me overly extended on the register and refuse to give a loan. As the pressure is put on credit unions, people go to moneylenders and get smaller loans. The moneylenders take the risk as they call to the door every week, but they are exempt from this legislation. Although it is right that we force credit unions and other financial institutions to do this, we must recognise there is a knock-on effect whereby people go to riskier lenders. If the moneylender does not give a loan, some people, out of desperation, will go to illegal moneylenders. That is the trickle-down effect.

If we apply the regulations to credit unions, we must ensure we realise what a desperate person will do when a credit union checks the register and finds that the person should not be given a loan because of his or her level of indebtedness. That person will turn to the moneylender, visiting the website of Provident or another legally registered and regulated entity in the State for the money. It may be provided by the moneylender without complying with this legislation.

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