Seanad debates

Wednesday, 1 June 2022

Consumer Credit (Amendment) Bill 2022: Second Stage

 

10:30 am

Photo of John CumminsJohn Cummins (Fine Gael) | Oireachtas source

I welcome the Minister of State to the House. Fine Gael supports the Consumer Credit (Amendment) Bill 2022.

As has been outlined already, the main proposal is to introduce an interest cap on moneylending loans which will protect low-income households who avail of moneylender loans. I too represent many working class communities and have done so since 2009 when I became a councillor in Waterford. I know personally of the devastation moneylending can impact on so many families. However, this is an important step to move to regulate this industry that has essentially operated like the wild west, in many cases, up to now. We are trying to reduce the cost of credit but as Senator McDowell also said, we must be mindful of the ability of people to be able to lend while also not trying to drive lending underground, where it will happen, and happen at a far higher interest rate. Oftentimes violence will also run through it.

There are some positive steps in this Bill. The Minister of State outlined some of them in his speech. Section 2 includes reference to the terminology and states the new classifications will be "high cost credit provider[s]" and "high-cost credit". That is a positive move because it is important we state on the tin what this is. It is no longer acceptable for such practices to just be called "moneylending" as if they are the friendly person at the door who is being very kind in terms of lending. These are high-cost credit providers. It is true they are needed at times by people but we need to be mindful and document exactly what it is, that is, a high-cost credit provider. We have the likes of our credit unions and many others to provide lower-cost loans. Of course, all of us in the House encourage people to avail of those products, which are far more appropriate than the high-interest loans on offer.

The cap, as has been referenced, sets a maximum of 48% interest. I note also the Minister of State said the regulations would be set at that level initially but there would also be a review within three years of this coming into operation. I suggest that review be brought forward to perhaps 18 months into the legislation's operation or a maximum of 24 months afterward. We would then be able to see how it is operating and if we need to reduce the caps. It would also allow us to ensure people still have the ability to avail of those loans, should that be necessary as a last resort.I hope such a suggestion can be taken on board on Committee and Report Stages. Overall, however, as regards the thrust of the Bill, this is an important step forward in regulating what has for a long time been essentially an unregulated industry, with interest rates ranging into very high figures. I hope some of the suggestions I have made can be taken on board.

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