Written answers

Wednesday, 14 May 2008

Department of Finance

Financial Services Regulation

9:00 pm

Photo of Finian McGrathFinian McGrath (Dublin North Central, Independent)
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Question 141: To ask the Minister for Finance if he will ensure that a maximum interest can be charged by all official money lenders and to make unofficial lending a crime punishable by a prison sentence. [18896/08]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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The Deputy may wish to note that in early 2007, the Financial Regulator (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 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.

As far as the question of illegal moneylending is concerned and the penalties for engaging in this activity, Section 98(1) and (2) of the Consumer Credit Act, 1995 provide that a person must not engage in the business of moneylending without licence and Section 12 provides that a person commits an offence (other than a summary offence) if the person contravenes either of those subsections. Moreover, Section 13(1) provides that a person who is so guilty shall be liable on conviction on indictment, to a fine not exceeding €100,000 or imprisonment for a term not exceeding 5 years or both.

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