High-interest doorstep lenders face new law limiting their take

THE Government is to clamp down on door-to-door moneylenders who charge sky-high interest rates.

Many moneylenders charge more than 180% per year and some even add on charges of 14c per euro for collecting repayments at the door.

However, new rules are being tabled that will soon become law, limiting cash loans at a simple interest rate of 1% per week to a maximum of 48% per year on the amount borrowed.

Commenting on the Consumer Credit (Amendment) Bill 2021, Finance Minister Paschal Donohoe said it ‘will seek to ensure fairness for consumers in terms of the rate charged by moneylenders, while also allowing for moneylenders to continue to operate where that service is needed. By simplifying and reducing the rate that is being charged and taking steps to modernise the sector, we can better protect those who avail of these short-term services’.

However, critics of the new rules say some broke and struggling families could be pushed into the hands of unlicensed lenders who charge even more and are not regulated.

Finance expert Brendan Burgess, of askaboutmoney.com, warned that squeezing licensed moneylenders will push them out of the market.

‘It’s not good news because that whole legitimate business will now go out of business and they will all be dealing with the thugs who lend money on the side of the street, the unlicensed moneylenders,’ he said.

‘This will kill off the business. If you limit the interest rate, will these companies be able to survive on that?

‘These are unsecured loans, they don’t send in a thug to break your legs if you don’t repay it so people will probably end up paying 100% and have their legs broken [if their debts are not paid].’

After racking up losses of €87million last year, high-cost money lender Provident announced last month it was quitting the doorstep-loan business in Ireland and was writing off all debts.