For the first time, this Bill will allow the Minister for Finance to set the maximum interest rate at which a high cost credit loan can be provided.
The name ‘moneylenders’ will be officially changed to ‘high cost credit providers’. The purpose of this is to accurately inform people in advance of the high cost of these loans.
This will assist people and families who have difficulty obtaining credit from other lenders. Research shows that the majority of people who take out home collection loan are women with children, who typically borrow money for family purposes at various stages throughout the year. Research shows that the average high cost credit loan was €785, with the most frequent term being 9 months.
The Bill prohibits high cost credit providers from charging for home collection services. It will also allow for online repayment books if a consumer so wishes, showing people the outstanding balance on their loan. This is necessary as many borrowers were reliant on paper records previously.
The Central Bank will examine the effectiveness of the interest rate caps and the Government will consider any recommendations they make in the future.
The Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Seán Fleming, said:
“This Bill will protect people from excessively high interest rates from high cost credit providers. It will also put an end to the additional cost of paying for collection charges. Only by regulating these interest rates can the Government better protect people. I would urge anyone experiencing financial difficulty to please contact the Money Advice and Budgeting Service.”
