Social welfare & minimum wage cuts are stimulus package for moneylenders
Issued : Tuesday 15 February, 2011
Speaking in Crumlin this morning, Cllr Eric Byrne, who is contesting the forthcoming General Election on behalf of the Labour Party in Dublin South-Central, has said that the incoming Government must impose tighter regulations on the moneylending and so-called ‘buy-back’ sectors.
“The moneylending and ‘buy-back’ sectors have been booming since the onset of the recession, and the social welfare and minimum wage reductions imposed by the outgoing Government have acted as a further stimulus package for this sector.
“As of the end of last year, an estimated €113 million was out on loan to poor households by moneylenders charging interest rates of up to 188%. At the same time, so-called ‘buy-back’ operations – where customers sell goods to a shop, and are given a specific period within which to buy it back at a higher price – are proliferating in areas such as the south inner city and Crumlin.
“These buy-back operations are not legally classified as pawnshops, because the goods technically belong to the shop rather than the customer.
“As well as addressing the issue at source – by protecting the incomes of the poorest groups in society, increasing the resources available to MABS and forcing financial institutions to provide basic bank accounts – the incoming Government must impose tighter regulations on the moneylending and ‘buy-back sectors.
“As a start, there needs to be a lower cap on the maximum rates of interest charged by moneylenders, and ‘buy-back’ operations must be licensed and regulated.”
