As some face interest charges of 150%, Govt must act on moneylenders
Issued : Friday 4 January, 2008
Statement by Roisin Shortall TD
Minister of State, Department of Health with responsibility for Primary Care
I welcome the publication by the Free Legal Aid Centres (FLAC) of a new booklet setting out the legal rights of people who use money-lenders, but this does not absolve the government from its obligation to provide new sources of credit for low income families and to protect them from excessive interest rates charged by licensed money-lenders.
When is a tenner not a tenner in the Ireland of 2008? Well, the answer is when it belongs to a moneylender. In today’s Ireland, some borrowers are having to repay €28.50 for every €10 borrowed from one of our licensed moneylenders – that’s an interest rate of 188.5%. Imagine being so desperate for cash that you are willing to repay almost three times the original loan over a few short months. The trouble is, this moneylender is not alone. Fifteen registered moneylenders charge 150% or more; 30 charge 100% or more – and believe it or not, it’s all legal and fully sanctioned by the Financial Regulator. This highlights a real divide in Ireland when it comes to accessing credit. The last time the CSO measured it, 68% of the poorest in our society had no current account. This presents real difficulties in accessing cash and is one of the principal reasons why moneylenders are doing so well. The problem of debt is a growing one in our society and the Government is not doing enough to control it. At this time of year many low income families will find themselves faced with crippling levels of debt, because they had to resort to money lenders to cope with the cost of Christmas. When 41% of lone parent households have debt problems, and 12% of large families have debt problems, we simply cannot stand idly by and allow moneylenders free rein. The licensing system for money lending needs to be drastically overhauled. It’s time to end State sanctioned extortion by moneylenders. Back in October 2006, the then Minister for Social and Family Affairs, Seamus Brennan, promised that he would introduce legislation to curb interest rates. Nothing further has been heard of that promise. A Bill to put the Money Advice and Budgeting Service was published by the government in 2002, but never proceeded with. The government needs to start treating money-lending with the seriousness it deserves.
