New rules on moneylenders will protect consumers

The Director of Consumer Protection with the Central Bank said new rules for licenced moneylenders will enhance and strengthen protections for customers of these services.

Under the new measures, all advertisements for high cost loans with an APR over 23% must include “prominent warnings” and prompt consumers to consider alternatives.

While the majority of the regulations will come into effect on 1 January 2021, the high cost warning will take effect on 1 September this year.

In addition, money lenders will not be allowed to make unsolicited offers to customers who have just paid off, or are close to paying off, a loan.

Another measure means that the moneylender must advise the customer to contact the Money Advice and Budgeting Service if the loan is for rent or a household bill.

Grainne McEvoy said the extensions of credits by moneylenders has decreased in the light of the Covid-19 pandemic, which could be due to a combination of factors, including a decrease in demand for credit.

Speaking on RTÉ’s Morning Ireland, she said the Central Bank has written to all licenced lenders, asking them to be mindful of the potential for customers to have increased vulnerability as a result of the pandemic and asking them to carrying out adequate affordability checks. 

She said the Central Bank has no power to impose a market cap on interest rates and this would require a change in law.

Ms McEvoy also said she would be cautious about a blanket cap because it might not necessarily mean a better outcome for consumers.

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