Paschal Donohoe (Dublin Central, Fine Gael)
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The Consumer Credit Act 1995 already provides for the regulation of moneylenders though it does not provide for a maximum rate of interest.  The legislation provides that the Central Bank can refuse to grant a licence to a moneylender if it is of the opinion that the cost of credit to be charged is excessive.  Since the Central Bank assumed responsibility for the licensed moneylending sector in 2003, I understand that it has not permitted an increase to the maximum APR charged in the sector.  During the Central Bank’s engagements with new or potential applicants It examines, on a case-by-case basis, if the proposed costs of credit are excessive and I understand that it has successfully challenged firms in this regard.  In addition, the Bank has not licensed any moneylender to provide a ‘pay-day loan’ service such as exists in other jurisdictions such as the UK.

As the Deputy may be aware, Deputy Doherty initiated a Private Member's Bill which would cap the amount of APR chargeable on loans issued by licensed moneylenders at 36 per cent APR.  As outlined during the debate, the following work needs to be done before an interest rate restriction is introduced:

- consider how to persuade the other approximate 50% of credit unions to take part in the  "It makes sense" loan scheme.

- consider how to cater for individuals on low incomes who are NOT social welfare customers since the PMC scheme only works for social welfare recipients.

- analyse the sector in more detail to see the impact that setting interest rate restrictions is likely to be on the various types of moneylenders, and

- examine illegal moneylending as far as we can.

Both the Social Finance Foundation and the Interest Rate Restriction report made it clear that the recommendation that rates be restricted should not be separated from the proviso that these restrictions are to be conditional on there being a reliable alternative to licensed moneylenders and key to this is getting the credit union movement to commit to serve the community currently serviced by the moneylending firms, subject to adherence to prudent credit guidelines.