John Deasy (Waterford, Fine Gael)
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To ask the Minister for Finance the number of licences that have issued to moneylenders; the number of convictions in each of the past five years for illegal trading as a moneylender; the checks, if any, that are carried out by the Central Bank of Ireland on licensed moneylenders to ensure they are charging the declared interest rate; his plans to cap the rate of APR charged by moneylenders; and if he will make a statement on the matter. [55371/12]

Michael Noonan (Limerick City, Fine Gael)
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Moneylenders are licensed by the Central Bank of Ireland in accordance with the provisions of Part VIII of the Consumer Credit Act 1995 (as amended). Moneylenders have to apply to the Central Bank each year for renewal of the licence. In addition to the provisions of the Consumer Credit Act 1995, a licensed moneylender must comply with the provisions of the Consumer Protection Code for Licensed Moneylenders (the Code) and with the European Communities (Consumer Credit Agreements) Regulations 2010.

I have been advised by the Central Bank that, as at 29 November 2012, there are 44 licensed moneylenders.

Compliance with the terms and conditions of the licence is monitored on an ongoing basis by the Central Bank through supervision, themed inspections, mystery shopping, consumer intelligence and complaints from the Financial Services Ombudsman. Failure to adhere to the terms and conditions of the licence may lead to proceedings under the Central Bank’s Administrative Sanctions Procedures, which enable the Central Bank to sanction and fine regulated entities for breaches of regulatory requirements. Since 1 December 2011, licensed moneylenders are also subject to a fitness and probity regime. The Central Bank undertook a themed inspection of licensed moneylenders in 2010. The main findings were that, overall there was a high level of compliance among firms and that consumers were charged in accordance with moneylenders’ authorised APRs and costs of credit. The Central Bank carried out another themed inspection of moneylenders recently and is currently finalising reports.

Interest rates charged 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. Interest rate caps for moneylenders are not provided for in the Consumer Credit Act, 1995. As the Deputy is aware, I mentioned in the House on 18 July 2012, at the conclusion of the debate on the Private Members' Bill on the issue of capping the interest rate charged by licensed moneylenders, that I would draw to the attention of the Governor of the Central Bank, the concerns and points raised during the debate. I have received a reply from the Governor and its contents are being examined.

The Central Bank endeavours to increase disclosure and understanding of the costs associated with loans provided by moneylenders and the Consumer Protection Code for Licensed Moneylenders requires the disclosure of the all the fees, costs and interest in a clear manner. Prior to entering into a loan agreement with a consumer where the APR is 23% or higher, the licensed moneylender must prominently display that fact and use the words typed in high font: ‘Warning: This is a high-cost loan.’

I have been informed by my colleague the Minister for Justice and Equality, that persons operating as illegal moneylenders are in breach of the law. It is a matter for An Garda Siochana to investigate their activities. Under Section 98 of the Consumer Credit Act 1995, An Garda Siochana have sole responsibility for the investigation and prosecution of such offences. The Central Bank has no function or power in this regard. If the Central Bank has reason to believe that a person is operating as an illegal moneylender, the matter is reported to An Garda Siochana. The latest available figures provided by the Courts Service, as at 1 November 2012, indicate that no prosecutions for illegal moneylending have been recorded over the past five years.