Urgent need for a cap on moneylenders interest rates – Mary Lou McDonald TD

Sinn Féin President Mary Lou McDonald TD has said that “it is time to introduce a cap on moneylenders interest rates so they do not get away with extortion any longer”.

Referencing a recent report by the Social Finance Foundation on interest rates, she said the rates moneylenders can charge represents “State sponsored robbery” and that “there is an urgent need to introduce a cap on the interest rates that moneylenders can charge”.

Speaking during Leaders’ Questions in the Dáil this afternoon, Teachta McDonald said:

“In the run up to Christmas many, many families face the reality that making Christmas happen is expensive and providing the essentials is – regrettably – beyond the means of many.

“That unfortunate reality means that, in many cases, families must resort to borrowing money; from banks, from friends, from family members or from credit unions.

“For some people that is not an option and some resort to borrowing money from moneylenders and loan sharks, who in many cases are unlicensed and who charge punitive and quite frankly disgusting interest rates. They are a scourge on our society.

“But there is also a licensed moneylending industry in this State; whose practices are equally repulsive. A British based moneylender – Amigo Loans – has this week been given a licence by the Central Bank to operate in Ireland.

“The Central Bank has sanctioned it to offer loans with interest rates of up to 49.9% to people who have been excluded from accessing mainstream finance.

“They term that ‘mid-cost’ credit. I would call it daylight robbery and they are not far from the only ones at this game.

“A fortnight ago, the Centre for Co-operative Studies at UCC published a report on behalf of the Social Finance Foundation. It finds that moneylenders are licensed to charge interest rates of up to 187%, which when collection charges are added in, rises to 287% APR.

“The report also finds that a total of 21 of 28 EU Member States apply caps on high cost credit. That includes Ireland, but the only cap we apply is in respect of credit unions – we do not apply any cap on moneylenders.

“This is why – at this time of year – moneylenders go door to door delivering leaflets; preying on the vulnerabilities of people coming up to Christmas and charging these kinds of extortionate rates.

“Moneylenders are getting rich on the back of hard pressed people who only want to provide for their families and they can do that because the system that’s in place allows them to do so.

“It is State sponsored robbery and there is an urgent need to introduce a cap on the interest rates that these types of outfits can charge.

“There is also a need for a more wide-ranging reform of the regulation of moneylenders and the policing of illegal loan sharks.

“A number of years ago, we in Sinn Féin introduced a Bill that would have capped the interest rates moneylenders can charge. Fine Gael – and the Labour party – voted it down.

“It is now time to introduce a cap on moneylenders so they do not get away with this extortion any longer.”