The largest moneylending operation in the State has been fined by the Central Bank for giving out new loans to people to allow them to pay off existing loans with the company.
Provident Personal Credit was fined €105,000 in relation to the loans – many of which were distributed through its Letterkenny office.
The moneylender, which can legally charge interest rates that work out at 187pc over a year, breached a number of rules.
A probe by regulators found problems with 117 loans that it examined in the company’s Letterkenny office.
Provident did not advance the full loan to people who entered into moneylending agreements with it.
In other cases, some of the new loan was being deducted and used to repay outstanding amounts on loans which had previously been provided to those consumers.
The Central Bank also found that the firm had in place internal procedures and controls that could have denied certain consumers their entitlement to pay off their outstanding loans early under their moneylending agreements.
The Central Bank’s director of enforcement, Derville Rowland, said: “There are around 360,000 consumers of licensed moneylenders in Ireland. Loans from licensed moneylenders are being increasingly accessed by consumers and can be significantly more costly than those provided by other lenders such as banks and credit unions.”
She said research conducted by the Central Bank in 2013 found that a quarter of consumers experience difficulties in meeting repayments to their moneylender.
The company accepted that it had breached the rules.
Mark Stevens, Managing Director of Provident Personal Credit, said: “Provident Personal Credit fully accepts the reprimand and fine of the Central Bank of Ireland and regrets the breaches of the Irish Consumer Credit Act in our Letterkenny branch.
“We have upgraded our procedures and compliance systems to significantly reduce the risk of such contraventions happening again.”