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Moneylenders facing cap on interest rates

 

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Minister Paschal Donohoe

Minister Paschal Donohoe

Minister Paschal Donohoe

The interest rate that moneylenders can charge may soon be capped.

Finance Minister Paschal Donohoe revealed he is reviewing submissions made to his department calling for a cap on the high interest rates the doorstep lenders can legally impose.

Licensed moneylenders typically charge more than 86pc.

Some charge up to 288pc once collection charges are added in.

It is estimated there are 380,000 customers of moneylenders in Ireland.

There are 38 lenders licensed by the Central Bank, while the average loan is around €500.

Restrictions

Mr Donohoe told Labour's finance spokesman Ged Nash his department is currently reviewing the submissions made after it undertook a public consultation in 2019 seeking views on capping the cost of licensed moneylenders.

The majority of submissions called for the introduction of interest rate restrictions.

"A number of potential policy proposals have been prepared in light of these submissions and I am currently reviewing a draft report setting out these proposals, which I hope to publish in the coming months," Mr Donohoe said.

He said there would be a need to balance fairness for borrowers with a need to ensure that moneylenders do not stop offering their services.

The minister said there was a "potential for unintended consequences in terms of financial exclusion if the supply of credit is reduced".

Mr Nash said: "The extortion has to end and the minister must act fast to bring in a market-wide cap on interest rates charged by moneylenders."


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