CEO of ILCU addresses Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach

Posted on: 17 Jun 2021

CEO of Irish League of Credit Unions tells Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach

 “it is vital that Government ensures that extortionate interest rates are not charged. Credit unions know first-hand how they trap families and individuals in a lifetime of debt.  Everyone, whether employed or not, should have access to affordable credit.”

“Credit unions becoming the community banking sector is crucial, if they are to grow and deliver on the range of services, people want, from a people-led, community based movement.”

CEO of the Irish League of Credit Unions (ILCU) Ed Farrell, today addressed the Oireachtas Joint Committee on Finance, Public Expenditure and Reform and Taoiseach on the Consumer Credit (Amendment) Bill 2018.

Speaking on the effect of high interest rates, Ed Farrell said: “Credit unions know first-hand how they trap families and individuals in a lifetime of debt. Everyone, whether employed or not, should have access to affordable credit.”

Mr Farrell added that “credit unions, as a social movement with a financial purpose have proven that they were a viable alternative to moneylenders through the rollout of the Personal Microcredit Scheme (PMC)”.
In relation to the Consumer Credit (Amendment) Bill 2018, Mr Farrell said;

• The ILCU supports the proposal for the introduction of a cap on moneylenders’ interest rates.

• The ILCU deems that the amount of APR chargeable on loans by licenced moneylenders not exceeding 36% is appropriate.

• The ILCU does not believe that an interest rate cap will result in increased lending by illegal moneylenders.  The rationale for this is twofold:

1. The credit union movement as an alternative source of credit which is in place and;

2. International experience of such interest rate caps.

• The ILCU believes that consideration should be given to the introduction of an interest rate cap over a period of years, thus providing as fluid a transition as possible.  This could be achieved by way of a stepped down approach in advance of reaching the aspired cap over a number of years. This would allow time to monitor the situation and take relevant steps if, and when, required.

In relation to the wider policy context for credit unions, Mr. Farrell said it was imperative that the delivery by government on its plans, as outlined in the Programme for Government, for credit unions to become the community banking sector was crucial, if credit unions are to grow and deliver on the range of services, people want, from a people-led, community based movement. 

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