Currently there is no cap in operation with some lenders charging up to 210% APR. The Bill will be debated in the Dáil next Tuesday and Wednesday during Sinn Féin’s private members time with a vote taking place on Wednesday evening.
Deputy Doherty said:
“Under existing legislation there is no cap on the interest charged by licensed moneylenders. Some lenders charge an APR of up to 210%. What politician or Government Minister could support such high charges?
“Families struggling with the rising cost of living, increasing taxes and charges, and loss of income are faced with no other option than to take out high cost loans just to pay week to week bills. According to an Irish League of Credit Union study 10% of households are turning to moneylenders to pay household bills.
“Some lenders are getting rich on the back of hard pressed families. They can only do this because government condones excessive interest rates.
“Of the 46 moneylenders currently operating with licences in the state, 29 of them have APR’s of more than 100%. Fourteen of these charge over 150%.
“A 210% APR means that a €500 loan taken out by a struggling family to pay a gas or electricity bill would cost them €186 if the loan was for six months and €375 if the loan was for twelve months.
“Given that a €500 loan from a credit union would cost the same family €13 and €25 respectively. There is simply no justification for this massive mark-up.
“Such excessive interest rates push hard pressed families further into financial stress and poverty.
“There is no moral or economic justification for the absence of a cap on interest rates charged by licensed moneylenders. The Bill I am publishing today proposes a cap of 40%. This would mean that while some lenders would be required to charge less than this, no lender could breach the 40% cap.
“This would mean the €500 loan would cost the struggling family a maximum of €50 over six months or a maximum of €97 over twelve months.
“This level is fairer to customers while allowing licenced lenders to operate on a sound commercial basis.
“There is an urgent need for the government to introduce a cap on interest rates. There is also a need for a more wide-ranging reform of the regulation of licenced moneylenders and the policing of illegal loan sharks.”