Two recent court cases highlighted the continuing scourge of illegal moneylending and the appalling problems it can create for low income families when they fall into the clutches of the moneylending sharks. Only last week an unlicensed moneylender was convicted in a Limerick court on six counts of unlicensed moneylending, fined only £450 and bound to the peace for two years after the district justice heard evidence that he had charged an unmarried mother, as well as other disadvantaged and vulnerable people, interest rates of up to 1,300 per cent. The district justice said that if the law had so prescribed he would have imposed a maximum prison sentence.
Shortly before Christmas a Dundalk licensed moneylender, who, the court was told, charged an interest rate of 728 per cent, was fined £1,000 for what the district justice described as "taking most wicked advantage of other people". In this case the moneylender was not prosecuted under moneylending legislation and was only before the court because he had illegally taken an unmarried mother's allowance book as security for the loan.
The few cases which come before the courts represent just the tip of the iceberg. As anyone who has experience of dealing with the unemployed and low income families in general would know, illegal moneylending is extensive but it is one of those social abuses on which it is extremely difficult to get specific information because of the social stigma attached to moneylending and the aura of fear which surrounds it, especially in its illegal form. In many cases a husband or wife borrow money without the knowledge of their spouse and then face the terrible ordeal of trying to make the repayments on their own.
While moneylending has always existed in one form or another there has been a resurgence of it in the past decade due to the huge increase in unemployment and the numbers dependent on social welfare. There have been expressions of concern on the part of some Government Ministers but precious little action. For example, the loan guarantee fund announced by the Minister for Social Welfare in November 1989 amid much publicity has not dealt with the problem. For instance, only 430 families had availed of the scheme and taken out loans through their credit unions up to November 1990.
In the long term the problem of moneylending will only be dealt with when all people, those on social welfare and at work, receive a decent income which can adequately sustain them and their dependants. However, there are a number of steps which should be taken in the short term by the Government to end illegal moneylending and ensure legal lending and interest rates are subject to the strictest controls. There have been repeated promises from the Government that moneylending legislation will be updated but nothing has been done. The 1933 Act is inadequate and it should be updated to take account of modern conditions. Greater penalties should be introduced for illegal moneylending and the various loopholes which allow licensed moneylenders to boost their interest rates through the use of service or collection charges must be closed off. One very effective amendment would allow any loan given at a rate above the permitted level to be declared null and void with the borrower being absolved of any obligation to repay it.
The traditional Garda response, that they can only investigate specific cases where complaints have been made, is no longer adequate. For example, it is quite clear that the person involved in illegal moneylending is very often dangerous and has a criminal record. The Minister for Justice, after consultations with the Minister for Social Welfare, should ask the Garda authorities to establish a special Garda squad to investigate moneylending and there should be a more thorough investigation before moneylending licences are granted or renewed.
