Positive response from moneylenders to introduction of tighter regulations
THE body that represents moneylenders has reacted largely positively to moves announced last week to tighten regulation of the sector.
Moneylenders, who are legally allowed to charge interest of up to 188pc, will in future have to warn borrowers that their loans are among the most expensive in the State.
Following the tightening of the rules, these doorstep lenders will also have to get those taking out loans to answer a list of questions to ensure that the loan is "suitable" for them.
New rules introduced by the Financial Regulator also mean moneylenders will have to refer customers who default on their loans to debt counselling services like the State-funded Money Advice and Budgeting Service (MABS).
The regulator has put together a Consumer Protection Code for Licensed Moneylenders, which it is seeking submissions on. The code restricts moneylenders offering loans to people when they have not requested them.
A spokesman for the Consumer Credit Association, which represents 40 of the State's 50 licensed moneylenders, said the organisation welcomed the new code.
"On the whole we think it is fair," said Kevin Carey of the association.
The one area where his association would be appealing to the Financial Regulator for a change is the requirement that moneylenders write to the any customers who have missed just two payments.
The code called for moneylenders to write to anyone who defaults on a second payment and advise them about credit counselling services like the Money Advice and Budgeting Service.
Mr Carey said that on average moneylender clients tended to miss up to five payments in the case of a 26-week loan. Moneylenders do not impose penalties for missed payments, he added.
The Consumer Credit Association would prefer to be allowed to wait for four missed payments before being required to write to a customer.
Mr Carey said his organisation had no problem with the extra administration involved in ensuring a moneylender is appropriate for customers.
This is known as the suitability requirement.
"It is in our interests as a business to ensure we are not giving out money we are not going to get back. So we would already look at a customer's ability to repay," he said.
One of the big players in the moneylending market in Ireland is Provident, based in Dublin. It is licensed to charge as much as 187.22pc. Other big players include Cork-based Marlboro Trust Ltd, and Dublin-based R & P Credit.
The Financial Regulator is seeking submissions on the regulation of moneylenders up to May 16 next.
- Charlie Weston
