More than 100,000 heavily indebted consumers using moneylenders – Central Bank
MONEYLENDERS, who are legally allowed to charge up to 180pc for short-term loans, are giving cash-strapped consumers new loans before they have paid off existing ones, a probe by the Central Bank has found.
It is estimated that more than 100,000 heavily indebted people are being forced to use legal moneylenders, who charge exorbitant interest rates, in order to obtain lending as other financial institutions continue to turn them away.
Now a new inspection by Central Bank officials of nine of the 42 licensed moneylenders in the State has found that most are observing regulatory rules.
But head of consumer protection at the bank Bernard Sheridan said he was concerned about multiple loans being issued to consumers by moneylenders.
“We continue to focus on the area of costs and charges in this sector due to the high cost nature of these loans.
“While the majority of firms inspected were broadly compliant we discovered some serious issues in a small number of firms which we are pursuing individually with the firms,” Mr Sheridan said.
He added that cases were found where some consumers were provided with new loans before existing loans were repaid in full which was not the best interests of consumers.
“Using short-term, high cost loans for longer-term needs should be avoided and I would encourage consumers in such a situation to contact MABS for help and advice,” he added.