Marie Sherlock (Labour) | Oireachtas source

I welcome the Minister of State to the Chamber. The Labour Party welcomes the Bill. I find it strange, though, to be effectively welcoming a maximum interest rate of 48%. Interest of €480 paid on a €1,000 loan is exorbitant. It is wrong. The principle of the Bill to impose a cap is to be welcomed, but the cap is excessively high. I take on board what Senator McDowell said. There are many money sharks. There are illegal money sharks out there who will seek to exploit opportunities and will be there regardless of the regulated system. However, the 48% cap has to be reduced much more swiftly. I therefore join the calls to have the review over a much shorter period.

As has been said, those relying on moneylenders, as we all know, tend to be low-income, female and of a particular demographic in respect of which the costs associated with raising children or just trying to put a roof over one's head are disproportionately high. It is also important to say that any of us who have dealt with people who are reliant on moneylenders know that they borrow when they are credit-impaired. There is a key issue here as to what we are doing for those who are credit-impaired, perhaps because of decisions they made very early in their lives, or those who do not have bank accounts at all. Notwithstanding that the concept of a basic bank account now exists across every bank in this country, we know there are still a few thousand people out there who do not have bank accounts, incredible as that may seem in this day and age. The last piece of research undertaken on this is from some years ago now. We would all benefit from having an understanding of who does not have access to a bank account and, therefore, can only be reliant on the likes of a moneylender.

Reference has been made to credit unions and the stark contrast in respect of the cap for many credit unions on their cost of lending. We need to look at how we might better support credit unions and other State-run banking institution to lend effectively rather than having profit as the key incentive. Ultimately, low-income people have no other choice but to rely on whomever will give them the money, as opposed to having a choice in the market. The State needs to better provide for those persons.

Lastly, I appreciate that there is an updating of the regulation of moneylenders in this legislation, but I am uncomfortable with extending the licence from a one-year to a five-year period. We need to go back to those issues of enforcement to better understand that this legislation will work before we start to extend the licence period. I presume there was good reason at the time behind the removal of the requirement for moneylenders to register in each District Court area. Perhaps this is borne out of a position of distrust, but I do not believe we should loosen the regulatory conditions surrounding moneylenders in advance of understanding how they apply the cap. We have called on the Minister of State to reduce the cap. I know he has previously said there is a concern that moneylenders will escape the market. We should not make life easier for them in respect of their regulation. Overall, however, we support that a cap is being put in place, notwithstanding our very serious concern that it is being pitched at simply too high a level.