A representative body of licensed moneylenders in Ireland tried to prevent the public from finding out its opposition to the Government’s plans to impose a cap on the interest rate its members could charge borrowers.
The Consumer Credit Association (CCA) also objected to the release of a document which revealed it was strongly critical of research funded by the Central Bank which had been carried out by academics at University College Cork ( UCC) and had recommended the imposition of a limit on interest rates.
The UCC report concluded limiting the cost of credit was in the public interest and would ensure “fair and reasonable” interest rates, particularly as customers of moneylenders were more likely to come from poorer backgrounds who had difficulty in accessing other sources of credit.
The CCA said the report, which was used as a “key intellectual support” for new legislation passed earlier this month, “lacks rigour and robustness” as well as drawing “inappropriate conclusions” because data had been misinterpreted.
It also claimed the UCC report had disparaged and downplayed UK studies on illegal moneylending.
The CCA, which represents more than 20 firms that offer “home-collected credit”, had submitted its proposal for no limits to be imposed on interest rates charged by licensed moneylenders as part of a public consultation process initiated by the Department of Finance.
It also opposed the department’s proposal, which has been incorporated in the new Consumer Credit (Amendment) Act 2022, to change the term “licensed moneylender” to “high-cost credit provider”.
The CCA said the term was “a loaded phrase” and “misleading”, while it claimed “moneylender” was inappropriate to be used in legislation as it was widely considered a “pejorative” term.
The new legislation, introduced by Finance Minister Paschal Donohoe, sets a simple interest cap of 1pc with a maximum annual upper limit of 48pc to apply to cash moneylending agreements up to a term of one year. A second monthly cap of 2.83pc is to be applied on the outstanding balance of longer-term running accounts.
The CCA took a challenge to the Office of the Information Commissioner (OIC) to prevent its submission from being made public. In its appeal to the OIC, the CCA claimed previous information it had submitted to the Department of Finance had been used in an unfair and negative way against moneylenders by certain, unnamed third parties. For that reason and because of the sensitive nature of its criticism of the Central Bank-funded research, it has requested that its submission should remain confidential.
The OIC rejected the CCA’s appeal, saying it found it difficult to accept that a party seeking to influence the decision-making of the Department of Finance on an issue that was the subject of a public consultation “could reasonably expect that it should be entitled to do so in confidence”.
With the passing of the new legislation, CCA chairman Kevin Carey said the group feared it would lead to growth in people borrowing from illegal moneylenders.
According to the latest figures, there were 36 moneylenders licensed by the Central Bank in 2020.
Licensed firms issued over 296,000 loans during 2020 to the value of €198.1m, with €141.1m remaining outstanding at the end of the year.