Fianna Fáil has published new legislation to strengthen the regulation of licensed moneylenders in Ireland including provisions to protect consumers in the event the industry moves increasingly online as has occurred in the UK.
Spokesperson on Finance Michael McGrath stated: “We know from organisations such as MABS and St. Vincent de Paul that many people have found themselves in deep financial difficulty trying to repay loans to licensed moneylenders. I want to ensure that we have a regulatory environment that is fit for purpose, particularly in the context of the impact of the personal insolvency legislation which may restrict the ability of customers to access credit through mainstream providers.
“Our legislation will allow for tighter regulations including limiting on the frequency of adverts placed by moneylenders and ensuring the APR on the loan is properly displayed. We also want to prevent the type of wild-west practices that have become commonplace in the UK. We want to ensure that lenders cannot suggest that credit is available regardless of the borrower’s circumstances and we propose that loaded terms such as the following should not be permitted:
- ‘No credit checks’
- ‘No Credit? No Problem!’
- ‘Loan guaranteed’
- ‘Applications processed 24/7’
- ‘Borrow up to €500 instantly’
“Under our proposals there will be a requirement for licensed moneylenders to submit policies and procedures to the Central Bank such as the loan acceptance criteria or how consumer data should be used to reach lending decisions. Lenders will have to ensure they have trained staff to properly assess the information they see such as spotting signs of possible over-indebtedness like payments to other lenders in bank statements. We want moneylenders to provide far greater information to borrowers on the implications of rolling over their new loan.
“We will require lenders to validate and cross-check information where practicable – for example, comparing recent bank statements and pay slips to verify income and employment data. Lenders will be obliged to confidentially share data on applications so people can’t take out several loans at once from different companies.
“This legislation is about protecting consumers and getting ahead of the game. We have seen moneylenders moving online and advertising heavily in the UK and we need to be prepared for a similar situation emerging here. We also believe the Central Bank needs to publish on a periodic basis information on the amount of credit being provided by licensed moneylenders. At present, we have the ridiculous scenario where no figures are available on the amount of lending in the Irish market from the 43 licensed moneylenders.”