Vol. 516 No. 5
125 Mr. Deasy asked the Tánaiste and Minister for Enterprise, Trade and Employment the individual who controls the interest rates charged by licensed moneylenders; and if she has satisfied herself that the rates are not exorbitant when one considers the rates at which these lending institutions can obtain their funds. [5282/00]
The Consumer Credit Act, 1995, allocated responsibility for issuing licences to moneylenders to the Director of Consumer Affairs. Applicants for a moneylender's licence must go through a formal application process. The Director of Consumer Affairs may refuse an applicant a licence on a number of grounds, including if, in the director's opinion, the cost of credit, interest rate plus additional charges, including collection charges, to be charged by the applicant is excessive or if any of the terms and conditions attaching thereto are unfair. In a number of instances, her office has advised applicants that they would not be granted licences unless they reduced their proposed cost of credit. On each occasion, the moneylenders concerned reduced their proposed charges.
The cost of credit charged by licensed moneylenders varies. I understand from the Director of Consumer Affairs that the costs of providing a moneylending service are considerably higher than those involved in mainstream credit lending. The costs are incurred in servicing the loan rather than funding the loan. For example, a typical moneylending operation involves home collected credit unlike a typical loan from a mainstream credit provider.
I understand from the Director of Consumer Affairs that the number of complaints in relation to licensed moneylenders has continued to fall since the introduction of the Consumer Credit Act, 1995. Most complaints relate to the collection practices of moneylenders or their agents. The director investigates all such complaints and she has assured me that she receives the full co-operation of the licensed moneylenders in any such investigations.
The Director of Consumer Affairs has advised me that in seeking to ensure that licensed moneylenders are not imposing excessive rates of charge, she is anxious to ensure that licensed moneylenders are not replaced by unlicensed moneylenders. The director has also advised me that her office will continue to keep the total cost of credit charged by moneylenders under review.
