First of all, I would expect that all moneylenders would behave responsibly and respect the public health measures, including the social distancing measures, which have been put in place by the Government. Moneylenders should seek to implement alternative repayment methods, if possible, during this time.
The Central Bank of Ireland (Central Bank) is responsible for the licensing and supervision of licensed moneylenders under the provisions of the Consumer Credit Act, 1995 (CCA). I am advised by the Central Bank that there is a strong framework of protection in place for consumers who choose to avail of the services of licensed moneylenders. The provisions of the European Communities (Consumer Credit Agreements) Regulations, 2010 (the CCR) set out certain additional requirements in relation to advertising and the content of relevant documentation (contractual and pre-contractual) to accompany certain credit agreements including moneylending agreements. The Central Bank’s Consumer Protection Code for Licensed Moneylenders (ML Code) also applies to licensed moneylenders engaged in the business of moneylending.
The relevant statutory and regulatory provisions in relation to advertising by licensed moneylenders are set out in the CCR and the ML Code. Regulation 7 of the CCR sets out that where an advertisement contains a reference to an interest rate or any figure relating to the cost of credit to the consumer that other standard information shall be included in a clear, concise and prominent way by means of a representative example. As set out in the ML Code, licensed moneylenders are required to act honestly, fairly and professionally in the best interests of the consumer and the integrity of the market. The ML Code also requires all advertisements to be fair and not misleading. At all times advertising must be in the best interests of consumers and compliant with Codes and Regulations. The Central Bank is continuing to work towards the publication of the revised ML Code in the form of Statutory Regulations, which it expects to issue shortly.
In addition to the protections provided under the Central Bank’s ML Code, there are also important protections provided for in the relevant legislation whereby licensed moneylenders are prohibited from applying additional charges (other than a collection charge) to a moneylending agreement and are also prohibited from applying any additional charges in the event of a default in the payments due under the agreement (i.e., the total amount repayable by a consumer is limited to the amount specified in the moneylending agreement (the only exception being the awarding of legal costs by a Court of law)). Licensed moneylenders are also required to undertake a creditworthiness assessment before entering into a moneylending agreement with a consumer. The Central Bank has previously highlighted its expectation to all credit providers, including licensed moneylenders that they lend responsibly and act in the best interests of consumers.
Given the potentially increased vulnerability of the consumer base who typically engage with licensed moneylenders and the high cost nature of moneylending loans, the Central Bank expects licensed moneylenders to conduct their activities in a manner which reflects a culture of responsibility at all times. The Central Bank actively communicates to moneylenders in this regard.
Licensed moneylenders need to be sensitive to changes in consumers’ circumstances due to the public health measures taken to counter the spread of the COVID-19 virus, which have left many in a financially vulnerable situation. The Central Bank expects licensed moneylenders to take account of the difficult and challenging situation in which many consumers find themselves and to take a consumer-focused approach in providing reasonable arrangements and/or assistance to support consumers affected by the COVID-19 situation at this difficult time. Licensed moneylenders who continue to issue loans to consumers must ensure they carry out adequate affordability assessments, particularly taking into account any financial difficulties faced by consumers as a result of COVID-19.
People experiencing financial difficulties should explore all the options available to them before applying for a loan. The Money Advice and Budgeting Service (MABS) is available to anyone experiencing problems with budgeting and debt. Furthermore, Government has introduced a range of supports to help people where their employment or salary has been impacted by COVID-19, including the Pandemic Unemployment Payment and the Temporary COVID-19 Wage Subsidy Scheme. These measures should also assist those in difficulty and hopefully negate the need to borrow, particularly at high interest rates.
Finally, the issue of moneylender interest rates is currently being examined by the Department of Finance. The Department undertook a public consultation in 2019 seeking views on capping the cost of licensed moneylenders and other regulatory matters in relation to moneylending. Analysis of the submissions received during the consultation is being used in framing of policy proposals by my Department.
