Brian Stanley (Laois-Offaly, Sinn Fein)
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Question 12: To ask the Minister for Finance if he is concerned with the reports that legal moneylenders are now going door to door seeking custom; and his plans to regulate this behaviour and to further reduce the interest rates that these legal moneylenders can apply to their customers. [27672/11]

Michael Noonan (Limerick City, Fine Gael)
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Firstly, I wish to assure the Deputy that there is a comprehensive regulatory 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 (the Act) sets out the Central Bank's powers in relation 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.

Under section 97 of the Act, the licensed moneylender is required to issue an authorisation to any person who is engaging in the collection of repayments on his/her behalf. Agents employed by licensed moneylenders are subject to the requirements of the Act and the Central Bank's Consumer Protection Code for Licensed Moneylenders (the ML Code) in the same way that the licence holder is. A copy of the ML Code is available on the Central Bank's Website www.centralbank.ie . All moneylenders (and their agents/employees) must comply with these provisions. There are a number of provisions which are particularly relevant to moneylenders who call to consumer's homes, including the following:

· moneylenders are prohibited from offering unsolicited pre-approved credit facilities to consumers under common rule 31 of the ML code,

· moneylenders are prohibited from offering top-up loans to consumers under section 99 of the Act,

· section 110 of the Act sets out requirements relating to prohibitions on collecting repayments at certain times. Specifically, moneylenders (or their agents/employees) cannot collect repayments between the hours of 9 o'clock in the evening on any week day and 10 o'clock in the morning on the following day, or at any time on a Sunday or a public holiday. If the consumer has given his/her express consent, in writing, then a moneylender can collect repayments between the hours of 8 o'clock and 10 o'clock in the morning on any week day. If the consumer has given this consent, he/she may withdraw it at any time, if he/she so wishes.

· moneylenders are obligated to assess the creditworthiness of consumers before concluding an agreement with the consumer in accordance with regulation 11 of the European Communities (Consumer Credit Agreements) Regulations 2010.

The Central Bank has informed me that they use a number of methods to assess compliance with their codes and other applicable legislation. Licensed moneylenders who fail to comply with the provisions of any of the Central Bank's codes or applicable consumer protection laws could be subject to possible sanction under the Central Bank's Administrative Sanctions Procedure.

With regard to the interest rates charged by moneylenders, I set out, below, the position.

Interest rates and financial products are not regulated by the Central Bank so each institution determines the rate it charges its customers, depending on a number of factors, including risk. I have no function in this regard. Interest rate caps for moneylenders are not provided for in the Consumer Credit Act 1995. It should also be noted that there are no interest rate caps in relation to the industry categories which the Central Bank supervises (apart from the interest rate cap imposed on the credit union sector).

However, the Central Bank is endeavouring to increase disclosure and understanding of the costs associated with loans from moneylenders.

Under Common rule 3(b) of the MLCode, prior to entering into an agreement with a consumer, a moneylender consumer must:

disclose all the fees, costs and interest in a clear manner, and

prominently indicate the high-cost nature of the loan on all loan documentation where the APR is 23% or higher. This disclosure must take the following form: Warning: This is a high-cost loan.

In addition, the annual percentage rate allowable under moneylending licences are publicly stated on the public register of moneylenders which is available on the Central Bank's website.

I would 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 see relevant information on regulatory matters, including the regulation of moneylenders.