Dáil Éireann Debate, Tuesday - 11 November 2014
191. Deputy Pádraig Mac Lochlainn asked the Minister for Finance if the Central Bank of Ireland intends to inform moneylenders' customers of their legal rights, especially in advance of the Christmas season. [42878/14]
View answer192. Deputy Pádraig Mac Lochlainn asked the Minister for Finance the way moneylenders can justify that a majority of their customers, who are on welfare benefits, are making loan repayments at a weekly rate of €50 or more. [42879/14]
View answerI propose to take Questions Nos. 191 and 192 together.
I have been advised by the Central Bank that consumers of licensed moneylending are protected by a range of provisions that moneylenders must adhere to, including but not limited to the Consumer Protection Code for Licensed Moneylenders, the European Communities (Consumer Credit Agreements) Regulations 2010 and the Consumer Credit Act 1995. These have detailed requirements specifying the information that a moneylender must provide to a consumer, prior to entering into a loan and also during the term of a loan.
Before entering into a loan a moneylender has a statutory duty under Regulation 11 of the European Communities (Consumer Credit Agreements Regulations) 2010 to assess the creditworthiness of a consumer, using sufficient information. While the Central Bank acknowledges that the home collection credit industry may lend itself to building on-going relationships with consumers, the Central Bank has stated that such on-going relationships should not be solely relied upon when assessing consumers' creditworthiness. The Central Bank expects that moneylenders must consider all existing loans and any arrears a consumer may have when assessing creditworthiness and must have strong documented evidence of the consumer's income, expenditure and ability to repay, before advancing each loan.
A moneylender must have a warning on the loan agreement highlighting that it is a high cost loan. Furthermore, the Central Bank maintains a register of all licensed moneylenders, which includes details of the maximum APRs and costs of credit that they are permitted to charge.
The Central Bank periodically undertakes research to inform the regulatory approach to the licensed moneylending industry in Ireland and to see how the firms are treating their customers. The most recent research, which was conducted in 2013, included engagement with customers of moneylenders as well as moneylenders themselves. The engagement with customers included structured telephone interviews with 500 customers and in-depth interviews with 8 customers. In addition, the research agency consulted with key stakeholder bodies, who provided a valuable insight into the review and helped provide a balanced analysis of the industry. The report was published in November 2013 and is available on the Central Bank's website at www.centralbank.ie.
The Central Bank recently advised the moneylending industry that assessment of the creditworthiness of consumers will be a future area of focus for the Bank and, where breaches are identified, the Bank will take steps to enforce compliance (including monetary or other penalties). For additional information see the industry newsletter and the Central Banks communication on responsible lending on the Central bank's website at www.centralbank.ie.
The Central Bank have also indicated that they will consider related media opportunities as part of its on-going media strategy.
