Credit union plan will end moneylending scourge
The nationwide roll-out of a micro-lending scheme provided through credit unions is the first serious attempt by the State to take on the scourge of moneylending.
For too long this State has taken a far too liberal approach to moneylenders. The Central Bank licenses them, imposes a code of conduct, but adopts a light-touch approach to their regulation.
According to the Central Bank's register of moneylenders, one operator is permitted to charge an annualised interest rate of 287.72pc, once collection charges are included. Rates as high as these are nothing short of scandalous. That such high interest rates are legal is shocking.
Now there is set to be an alternative. The 'It Makes Sense' scheme will see all credit unions able to offer low-cost loans to people who would otherwise rely on moneylenders or unlicensed loan sharks.
That could mean the lending product will be opened up to up to one million people. There is now an urgent need for credit unions to sign up for the scheme. After all, it fits well with the social responsibility ethos of credit unions.
Once the micro-lending scheme gains traction there will be no excuse for the Central Bank and the Government not to introduce laws to cap the loan rates moneylenders can charge. Credit unions themselves are already restricted to charging interest on loans of no more than 1pc a month.
Capping moneylender loan rates would likely lead to their demise, but that is the point. Good riddance.