Terence Flanagan (Dublin North East, Independent)
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191. To ask the Minister for Finance the reason there is currently no upper rate limit on the interest that licensed moneylenders can charge on loans; his plans to introduce legislation in this area; and if he will make a statement on the matter. [49174/13]

Michael Noonan (Limerick City, Fine Gael)
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Moneylenders are governed by a number of legislative obligations and supervisory requirements. Moneylenders are required to hold a licence in accordance with the provisions of the Consumer Credit Act 1995 as amended. This licence is issued by the Central Bank and must be renewed annually. Section 93(10)(g) of the Act states that the Bank may refuse to grant a licence where, in its opinion, the cost of credit to be charged is excessive or any of the terms or conditions attaching thereto are unfair.

Introducing an upper limit could make the licenced moneylending sector unviable, forcing consumers who are unable to access other conventional credit to turn to illegal, unlicensed moneylenders.

Furthermore, the annual percentage rate allowable under moneylending licences is publically stated on the public register for moneylenders. This register is available on the Central Bank’s website.

While it should be noted that moneylender loans can be more expensive than other forms of credit, many of these loans are unique in nature. For example, they may be small value loans, over a short term and repayments may be collected at the consumer’s home.

The Central Bank recently published a “Report on the Licensed Moneylending Industry”. The report is available on the Central Bank’s website. It is particularly striking that the figures show that moneylenders provide a service which many people are happy to use, even though the interest rate charged is very high. The report also found that the majority of customers know and/or understand the interest on their loan, the cost of credit and the APR.