Central Bank is proving no Amigo to the vulnerable

THE Central Bank goes out of its way to protect people taking out a mortgage, and the banks that issue them. But when it comes to vulnerable borrowers it does not appear to be quite so eager to throw a protective cloak over them.

That is certainly one conclusion that is hard to avoid after the regulator left its lending limits in place for those taking out a mortgage, at the same time that it has licensed another moneylender.

Moneylenders by definition deal with people unable to borrow from conventional lenders. British lender Amigo has now been approved to charge 49.9pc for loans here and expects to start operations from March next year. This is despite the fact that the last thing this country needs is another moneylender.

The granting of a moneylender licence to Amigo comes just weeks after a report by academics in University College Cork, co-funded by the Central Bank, called for a cap on moneylender interest rates.

To be fair to Amigo, its rates are better than the 187pc that can be charged by other moneylenders.

But the Amigo lending will be very high cost and the firm will lend to those with poor credit histories. It will require a family member or friend to go guarantor before the loan is issued.

This could see a lot of elderly parents ending up footing the bills if their children are unable to repay these high-cost loans.

But when it comes to mortgages, the Central Bank is far more paternalistic.

It is not changing its tough mortgage lending rules, which some claim make homes unaffordable for all but the wealthy.

There is little doubt that the mortgage lending limits are doing the job they were designed to do by limiting property price rises.

They are also saving banks and borrowers from engaging in irresponsible lending. It is just a pity the Central Bank would not show the same concern for the financially vulnerable.