Moneylender is offering An Post gift vouchers instead of cash
MONEYLENDERS are now offering gift vouchers to hard-pressed householders, the Irish Independent has learned.
Concern has been expressed that selling the vouchers is a way of making moneylending more attractive.
And the involvement of a state body in the development has prompted sharp criticism.
A subsidiary of An Post is supplying the vouchers to the biggest moneylender in the State, Provident Personal Credit, which is in turn selling them on doorsteps. The purchase price has to be repaid at an interest rate of 143pc.
Charity St Vincent de Paul (SVP) will today launch a campaign calling on An Post to stop selling the One4All vouchers to Provident through its subsidiary, the Gift Voucher Shop.
The campaign is supported by Fianna Fail's spokesman on finance, Michael McGrath, who has called on Communications Minister Pat Rabbitte to order An Post to stop the Gift Voucher Shop dealing with Provident.
SVP's head of social justice, John-Paul McCafferty, said Provident was offering vouchers – which can only be exchanged in certain shops and for certain services – as an alternative to cash loans.
"The SVP is concerned that agents will push the vouchers instead of cash, limiting the choice to the customer," said Mr McCafferty. He added that cash-strapped householders and other customers who buy gift vouchers from a moneylender would end up trading them for less than their full market value.
Provident admitted to this newspaper that it has 100,000 clients in Ireland.
"What we are doing is offering choice," a spokesman said. "We have no preference as to whether the customer takes vouchers or cash."
He claimed that the interest on repayments for a gift voucher was lower than for taking out a cash loan.
It costs €50 for every €100 borrowed to buy vouchers over a 50-week period, he said, which works out at an annualised interest rate of 143pc.
For a cash loan over 52 weeks, the cost is €56 for every €100 borrowed, which represents an annualised interest rate of 157pc.
When contacted by the Irish Independent, An Post's Gift Voucher Shop would not say if it was selling the vouchers to Provident at a discount.
"The terms under which Provident Financial Group plc purchases gift vouchers from the Gift Voucher Shop are subject to contractual confidentiality," said a spokesman.
He added that the Gift Voucher Shop was aware its vouchers were being sold by Provident, with repayments being made at moneylender interest rates.