ILCU welcomes publication of new Central Bank moneylender regulations

Posted on: 09 Jun 2020

ILCU welcomes publication of new Central Bank moneylender regulations

The Irish League of Credit Unions (ILCU) has welcomed today’s publication by the Central Bank of new regulations aimed at strengthening protections for consumers of licensed moneylending services and to enhance professional standards in the sector.

Responding to the publication, ILCU Head of Communications Paul Bailey said, “The ILCU, has long campaigned for clear regulations for licenced moneylenders in order to protect consumers from high cost credit. However, while we welcome the new regulations, we believe they don’t go far enough to protect vulnerable consumers. For example, in their consultation paper CP118, the Central Bank asks questions about the introduction of a debt servicing ratio restriction to protect consumers from spending a significant portion of their income on high cost lending. Any reference to this affordability measure appears to be absent from the new regulations”.

“While the new regulations are clear in their intention, it remains to be seen how they will be enforced to properly protect consumers particularly with home collection moneylenders. How will moneylenders provide evidence of their compliance to the regulator in the same way credit unions are required to do so?” added Paul Bailey.

The ILCU note that the issue of an interest rate cap is a question for the Oireachtas rather than the Central Bank, as the introduction of an interest rate cap would require a legislative amendment. However, we will continue to campaign on this issue and other credit union regulatory matters. We believe that a statutory maximum interest rate cap should be introduced to alleviate cases where the high cost of borrowing could potentially tie down individuals and families to a lifetime of debt.

In 2019 the ILCU responded to a Department of Finance consultation paper calling for the introduction of an interest rate cap for licenced moneylenders who at present can charge up to 288% APR inclusive of collection charges. We currently await the outcome of that consultation process which will hopefully inform the necessary legislative changes required.

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For interview requests please contact Aoife Breathnach on 087 350 4810 or by email abreathnach@creditunion.ie