Finian McGrath (Dublin North Central, Independent)
Link to this: Individually | In context

Question 93: To ask the Tánaiste and Minister for Finance if he will advise on a matter (details supplied). [15955/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

Moneylenders are covered by a range of provisions under the Consumer Credit Act, 1995 (CCA) including the annual licensing process and the register of licensed moneylenders system as administered by the Financial Regulator (FR). Licensed moneylenders are currently subject to the 'Interim Code of Practice for Licensed Moneylenders' which was introduced by the FR and comprises general principles with which licensed moneylenders must comply, such as acting fairly, with due skill and care, with appropriate resources and making adequate disclosure of all relevant information.

In early 2007, the FR published its review of the licensed moneylending industry in Ireland. With respect to interest rates, it concludes that the introduction of an interest rate ceiling for moneylenders may not achieve the objectives of lowering the cost of credit for consumers. The Report contained a number of other conclusions, including the fact that:

Overall, consumers that use licensed moneylenders as a source of finance are happy with the service provided despite the fact that it is a relatively expensive form of credit.

Not all consumers have access to other sources of credit.

The FR committed to reviewing the 'Interim Code of Practice for Licensed Moneylenders', with a specific emphasis on increasing transparency, helping consumers make informed decisions and enhancing the consumer protection framework.

In late 2007, the FR engaged with a number of interested stakeholders (including Credit Union representatives) with a view to increased transparency in relation to costs associated with loans from moneylenders. It sought views on how best to disclose an itemised statement of the Annual Percentage Rate (APR) on its Register and how best to highlight the total cost of credit associated with moneylenders. Responses are being considered in the context of work being carried out in relation to the draft Consumer Protection Code for Licensed Moneylenders and transparency in the moneylending sector.

In line with the above, the FR's Strategic Plan for 2008 — 2010 commits to having an updated code of conduct for moneylenders in place by December 2008. As part of this process the FR, in March 2008, published its 'Consultation Paper / CP33' entitled 'Consumer Protection Code for Licensed Moneylenders' seeking the views of persons on its content. The primary aim of the draft Code as contained in CP33 is to increase transparency in the moneylending sector. It proposes a number of provisions including 'suitability' of loans, disclosure of the high-cost nature of certain loans and the provision of information on credit counselling services, e.g. MABS, to clients who demonstrate difficulty in meeting their repayments obligations. The closing date for contributions on the consultation paper is Friday, 16 May 2008, after which the FR will consider the best way forward in light of submissions received.

The FR provides an information service covering the different forms of credit available to consumers and I strongly urge consumers to avail of this service. In particular, I urge all consumers to shop around for credit, to examine the scope to borrow from community based lenders such as credit unions and to avail of the information which is available through the FR's publications, help-line (Lo call 1890 77 77 77) and website: http://www.itsyourmoney.ie.

The Money Advice and Budgeting Service (MABS) which falls under the remit of my colleague, the Minister for Social and Family Affairs, is a national, free, confidential and independent service for people in debt, or in danger of getting into debt and its offices, throughout the country, work with people in order to assist them with their financial planning and budgeting for the future.

Finally, the Deputy may wish to know that my Department is currently undertaking a review the Consumer Credit Act, 1995 in the light of the recently adopted EU Directive on credit agreements for consumers. Furthermore, the Advisory Forum on Financial Legislation, which I have established to advise and assist in the consolidation and modernisation of financial services legislation, will, as part of its work, consider the basis for licensing moneylenders to facilitate lower costs.