Monday 26 September 2016

Editorial: A debt of gratitude to the Ombudsman

Published 16/06/2015 | 02:30

Donations have fallen
Donations have fallen

Borrow a little and if you can't pay it back, it's your problem. Borrow a lot and if you can't pay it back, it's the lender's problem. That old saw was turned on its head after the banking crisis and the socialising of billions in private debt on the backs of the taxpayer.

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But it seems when it comes to borrowing and lending, the lines can still be blurred. And it still seems that the smaller you are, the more likely you are going to face a tough time. Today, we learn that the moneylending sector is thriving. Paradoxically, a spin-off of the taxpayers' rescue of the banks and the hardship it visited on hard-pressed homeowners merely served to drive them deeper into the arms of the moneylender.

But, that the loan shark should be the beneficiary of the dire straits so many have found themselves in, seems especially egregious. The day of the "doorstep loan" has dawned and borrowers have been able to access more money even before the outstanding loan has been paid off.

This is the road to financial oblivion, and although the custom is illegal, it has become common practice.

As we report today, almost 25pc of those with moneylender borrowings were offered a new loan before the old one was paid off, despite the fact that this is in breach of the law.

As many as 360,000 people are known to use moneylenders. Many of these are not in a position to avail of expert financial advice. That is why the Central Bank has a grave responsibility to make sure that controls and rules are followed to the letter of the law.

People on low incomes need every protection that the State can provide. The fact that a major, multi-billion player in the market has been found to be clearly in breach of the law should act as a clarion call for greater vigilance.

The ruling by the financial services ombudsman that a couple should have their loan written off and get compensation, because they had loans illegally refinanced, could open the way for thousands more to make similar claims and is a good result.

But if the law was being applied as it should be, there would have been no need for it.

Welcome news on the 'welfare trap'

The jobseekers' scheme came in for much derision and was dismissed by many as a distraction where meaningful action was what was required. The latest findings from the Economic and Social Research Institute (ESRI) suggest otherwise. It has not developed into a snare or disincentive to dissuade people from returning to work when opportunity allows. In fact, as many as 60pc would actually see their income double.

Nonetheless, there are still difficulties obstructing the path back to the workforce for those with families, which need to be looked at. For those reliant on a medical card, or those who will have to meet the considerable costs of childcare, a job could still be out of reach. Especially if one also factors in the potential loss of rent supplement.

The figures also tell us that most unemployed people are young, single and childless. While they may not be caught in a welfare trap, the greater problem is that the prospect of a job could still be remote.

And while the numbers may be falling, they are still far too high to be acceptable.

Clearly, as the report says, they would be better off at work but the effort to generate more employment must remain unstinting.

Irish Independent

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