Patricia Ryan (Kildare South, Sinn Fein) | Oireachtas source

The main purpose of the Consumer Credit (Amendment) Bill 2022 is to restrict the total cost of credit on moneylending loans. Under this Government, moneylenders are permitted to charge an annual percentage rate of 187%. That rises to 288% once collection charges are included. When compared with more affordable sources of credit, such as credit unions that have an APR of no more 12.67%, there are no grounds upon which such high rates can be justified. In 2013, the Central Bank published a report that found typical moneylending customers are predominantly female and from lower-income backgrounds. The astronomical rates charged by moneylenders risk driving vulnerable borrowers such as them into unsustainable and vicious circles of debt.

The Government proposes an interest cap of 1% per week up to a maximum of 48% per annum. In contrast, my colleague, An Teachta Doherty, has proposed in legislation an initial cap of 0.75% per week up to a maximum of 36% per annum and then a reduced cap after a period of three years of 0.35% per week up to a maximum of 18% per annum.

There are many provisions of the legislation Sinn Féin supports and previous speakers have mentioned this. These include: the separation of home collection moneylenders; the elimination of collection charges from home collection loans; the use of the simple rate of interest rather than the APR for home collection loans; the term limit of home collection loans of 12 months; and the ability of the Minister for Finance to amend rates further by regulation.

However, as was already said, the biggest weakness of this Bill was the proposed interest rate cap. It will allow moneylenders to continue to charge levels of interest that are excessive, immoral and unjustifiable. Deputy Doherty has spoken about this and I am going to speak about it again because I do not know whether the Minister of State really listens to what we say. The permitting of ultra-high interest rates is unethical. Many European countries have introduced interest rate restrictions. These high interest rates were described in Spain as excessive, in Finland as unconscionable and in Germany as lacking in moral legitimacy. The interest rate cap proposed under section 8 of this Bill is limited with no commitment to a reduced cap in the years ahead. We cannot allow an immoral financial regime that damages the economic interests of vulnerable borrowers to continue. Many of our older people have been victims of these moneylenders.

I met the local chapter of the credit union in south Kildare last week. It is doing a fantastic job in helping vulnerable people, as well as those just starting out, and I highly recommend them. I have been a member of the credit union since I was 15 years of age and it has certainly helped me through lean times. We need to ensure they are given every opportunity to prosper because their success means the community is successful.

See this speech in context