The Minister for Finance, Paschal Donohoe T.D, commenced the Consumer Credit (Amendment) Act 2022 and made Regulations under the Act, setting the maximum interest rate at which a high cost credit loan can be provided. Minister of State Sean Fleming brought the legislation through the Oireachtas.
An initial interest rate cap of 1% per week will take the most expensive products off the market and will require the bulk of products to be revised downwards. The maximum interest will be set at 48%.
At the same time, the initial rates will allow moneylenders to revise their business model and reduce their margin to enable them to operate within the legislative cap.
The Act also contains a range of measures to modernise and streamline the sector, including:
- Prohibiting high cost credit providers from charging for home collection services;
- Allowing repayment books to be maintained online;
- Allowing licenses to be issued for periods of five years at a time rather than one;
- Removing the requirement for high cost credit providers to register for a particular District Court area, and register State-wide instead; and
- Changing the term ‘licensed moneylender’ to ‘high cost credit provider’ to differentiate between licensed and unlicensed moneylenders.
The legislation follows a comprehensive review of the high cost credit sector undertaken by the Department of Finance, and takes into account the submissions received during the public consultation held by the Department in respect of the issue. Minister Donohoe published a Moneylending Policy Proposals Report on reform of the moneylending sector in July 2021.
Speaking today, Minister of State Sean Fleming said: “I was pleased to bring this legislation through the Oireachtas earlier this year. These changes give extra protection to people who may be under increased pressure to borrow for various family events especially over the Christmas period.’
This important legislation will restrict the rates that high cost credit providers can charge. It will reduce the cost of credit for the customers of high cost credit providers. It will provide better protection for consumers which is a key priority.’
