Séamus Kirk (Louth, Fianna Fail)
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Question 36: To ask the Minister for Finance if he will outline the progress made on the commitment in the Programme for Government to tightly regulate moneylenders. [15365/11]

Michael Noonan (Limerick City, Fine Gael)
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There is already a comprehensive licensing system in place for moneylenders. Moneylenders have to apply to the Central Bank annually to have their licences renewed. Section 93 of the Consumer Credit Act 1995, as amended, sets out the Central Bank's powers in regard to the grant or refusal of a moneylender's licence. The appropriate moneylending application form - new or renewal - must be completed and returned to the Central Bank with a number of items for review and consideration.

In addition to the licensing system, the Central Bank has in place a consumer protection code for licensed moneylenders. The Central Bank has power to impose sanctions on moneylenders for a contravention of the code. The code sets out general principles with which a moneylender must comply. For example, a moneylender must act honestly and professionally with due skill, care and diligence in the best interest of consumers. The code also places requirements on moneylenders in regard to the provision of information to the consumer, preservation of a consumer's rights, knowing the consumer, suitability, unsolicited contact, or cold calling, disclosure, errors, handling complaints, consumer records, unsolicited credit facilities, arrears and guarantees, debt collection and the contents and presentation of advertisements.

On 18 February 2011, the Central Bank published the results of a themed inspection of licensed moneylenders. The inspection showed a high level of compliance with the requirements of the code among firms. Inspections were conducted in 11 of the 46 licensed moneylenders currently operating in Ireland. The inspections focused on whether consumers were being charged in accordance with the moneylenders' authorised APRs - that is, their annual percentage rates - and costs of credit as set out in the moneylenders' licences. It also examined whether firms had their licences on display and whether they indicated the high-cost nature of loans on loan documentation issued to consumers, as required by the code. Overall, the inspections found a high level of compliance with the requirements and that consumers were being charged in accordance with the moneylenders' authorised APRs and costs of credit. In addition, firms had their licences on display and indicated the high-cost nature of loans on loan documentation issued to consumers.

I expect that in future the annual regulatory performance statement of the Central Bank will refer to the regulation of moneylenders. This statement will be presented to each House of the Oireachtas. The Central Bank Reform Act 2010 provides that a committee of the Oireachtas may request the Governor of the Central Bank or the head of financial regulation to attend before it and provide information relating to the regulatory performance statement. This will allow Deputies the opportunity to seek relevant information on regulatory matters, including the regulation of moneylenders.

Michael McGrath (Cork South Central, Fianna Fail)
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It is clear from that report that the level of compliance among licensed moneylenders is quite good but the issue is the plethora of unlicensed moneylenders. There was a commitment in the programme for Government to regulate this area tightly. Perhaps the Minister might elaborate on what he had in mind in that regard. Is it to bring in new measures which would bring into the net many of those unlicensed moneylenders or is he planning an even tighter regime in regard to those currently licensed and regulated by the Central Bank?

Michael Noonan (Limerick City, Fine Gael)
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Operating as an unlicensed moneylender is illegal and it is a matter for the Garda Síochána in the first instance. In regard to the licensed moneylenders, we have ongoing discussions with the regulator and the Central Bank about all the lending institutions. I will raise the issue the Deputy mentioned with the Cental Bank and the regulator.

Pearse Doherty (Donegal South West, Sinn Fein)
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On the issue of licensed and unlicensed moneylenders, given that many people, especially those on low and middle incomes, are going to moneylenders because they cannot get access to credit from the banks, does the Minister believe the APR they are allowed to charge is too high and that we need to revisit that issue owing to the economic conditions in which we find ourselves?

In regard to the illegality of unlicensed moneylenders, I do not know them personally but we hear stories of unlicensed moneylenders in most towns and villages throughout the State, in particular in the run-up to Christmas. The fact they are illegal does not seem to matter. Will there be tighter legislation which will remove these types of parasites who are feeding off the financial difficulties people experience, in particular in the run-up to events like Christmas?

Michael Noonan (Limerick City, Fine Gael)
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The APR is set down in regulation and it is always a matter of debate as to whether a particular interest rate is too high, but it is regulated. As Deputy McGrath pointed out, the issue of most concern is not the licensed moneylenders who, by and large, comply with the law, but the unlicensed moneylenders. The best approach to this is to ensure credit unions continue to be a strong part of the landscape for lending small amounts in communities throughout the country. We are committed to that in the reorganisation of the credit unions which is proceeding at present.