Sinn Féin introduce legislation to cap money lenders - Pearse Doherty TD
Sinn Féin Finance Spokesperson Pearse Doherty has tonight introduced legislation to cap the rate at which money lenders can charge interest on loans.
Speaking in the Dáil tonight, Teachta Doherty said;
“The rates are being charged by these companies are despicable, they have no place in the year 2018, and they had no place in 2012 when we first introduced this legislation.
“Regulated money lenders and other moneylenders are charging as much as 187% on loans. The borrowers caught in this trap are our neighbours, family and friends.
“Moneylenders at these rates simply take the money of poorer families and makes them poorer.
“The Government amendment to this Bill, which seeks a delay of twelve months, is not about protecting the vulnerable, it is about protecting the moneylenders.
"This is a straight forward piece of legislation that would help 330,000 people who borrow from moneylenders, or 7% of the entire population of the State.
“This is the option before us. We have waited long enough and so have the poorest families in the State who are living week to week, month by month in fear of the knock on the door.”
Note to editors: Please see attached a copy of Deputy Doherty's speech for tonight. Check against delivery.
It is six and a half years since I first brought this Bill before the House. Isn’t it telling that at that time the Fine Gael Minister told me that: this issue must be examined carefully to ensure the solution proposed does not adversely affect the most vulnerable members of society. This will be the Government's main aim in considering the findings of the examination to be carried out by the Central Bank and by the officials of the Department of Finance
What has changed except the name of Fine Gael Minister? They still want time to examine the issue. You have had enough time. We must act.
Why must we act? Let me give you some examples:
187% being charged by a moneylender called Colm Keegan.
187% being charged by Rossbro moneylender.
187% being charged by a company called Stalwart Investments.
Those rates are despicable, they have no place in the year 2018, and they had no place in 2012.
The government amendment is not about protecting the vulnerable, it is about protecting the moneylenders.
I urge all parties to reject it. The government know well this law does not pass into being tonight if we accept it. There is a process ahead of us in which preparation must be carried out but we cannot delay starting down that road.
I wish to pay tribute to the Social Finance Foundation and the Centre for Co -operative Studies, University College Cork for putting this back on our agenda. Unfortunately for many, as Christmas approaches, this is a very live issue every day.
The report by the UCC academics cuts to the chase as to why we must act:
It said clearly what the economic reality of moneylending is. It facilitates a ‘huge transfer of resources and potential assets from poor communities to the directors and shareholders of loan companies’.
Research in the US found that low- income house owners are stripped of approximately $9.1 billion a year through the practices of the so-called ‘alternative credit sector’. Research in Britain, found that in three streets with a total of 40 households, Stg£240,000 was being paid each year to high -cost lenders.
Moneylenders at these rates simply takes the money of poorer families and makes them poorer.
We cannot allow another Christmas to come and go without action.
I fully understand that there must be alternatives. The Credit Union movement serves this country well and is prepared to expand its “It Makes Sense” loan scheme.
It is already expanding. Some figures put on the Dáil record might suggest that the number of Credit Unions offering the loan is going in the right direction. In reality, the number of mergers might mean that on paper the number of Credit Unions offering the scheme has dropped but the reality is that more people than ever can access this scheme.
I urge all Credit Unions to take up the scheme.
It has been suggested by the Centre for Co -operative Studies and the Credit Union Advisory Council whose job it is to review the Credit Union Act that allowing a 2% cap instead of the current 1% monthly rate would allow some Credit Unions reluctant to take up the alternative source of credit to moneylenders.
That is not a demand of the Credit Union movement but is certainly worth looking at. I would be happy to consider using this legislation to facilitate such a change if it was deemed helpful. It would be a choice for each Credit Union whether to utilise the extra space as it saw fit.
Section 1 of the Bill inserts into the Consumer Credit Act the phrase:
The amount of APR chargeable on loans issued by licenced moneylenders shall not exceed 36 per cent.”. 36 per cent was chosen as it is three times the level the Credit Union movement can charge.
Section 2 is simply the citation.
It is a straight forward piece of legislation but would help 330,000 people who borrow from moneylenders- 7% of the entire population of the 26 Counties.
In October 2014 the total outstanding consumer loans in Ireland amounted to €153m with moneylenders. That is why we must act.
The borrowers caught in this trap are our neighbours, family and friends. Only this year the Irish League of Credit Union report told us that of the parents in debt come back to scholl time more than a quarter (27%) said they have turned to a moneylender in an effort to cope with the costs. This is up from 20% last year.
For some, this situation is getting worse and worse.
The Central Bank have carried out a consultation and done valuable work looking at regulations including restricting advertising, forcing moneylenders provide more information and warnings and improving the professionalism of the people employed in the sector.
That is all good work but I see this Bill as complimentary to them. The Central Bank idea of adopting the Australian model of a cap based on the level of income misses the whole point- a cap must be applied.
This is the option before us. The government propose a twelve month wait- what they mean is that they have no intention of implementing a cap.
Six and a half years ago they blocked this Bill. They are trying to block it again, I call on all parties to not let the m get away with it.
Yes, there are things that need to be done as we progress with the Bill so let’s get on with them. I will not be accepting any further delay. We have waited long enough and so have the poorest families sin the State who are living week to week, month by month in fear of the knock on the door.