By Sarah Mac Donald - 08 November, 2013
The Society of St Vincent de Paul (SVP) has said it is troubled by the benign findings of a new report on the moneylending industry produced by the Central Bank.
In a statement on Friday, the SVP said the report fails to include any recommendations for further regulation of the sector and shows worrying levels of acceptance of high cost loans for consumers.
The SVP acknowledged that the purpose of the report is to provide an overview of the sector with the aim of better informing the Central Bank of the relevant issues that affect the moneylending industry and to assist the Central Bank develop future policy.
However, according to Brendan Hennessy of the St Vincent de Paul, the report fails to “examine critically the growth and size of the industry in Ireland as well and the extremely troubling acceptance of moneylending as a form of credit to 360,000 households.”
“It also fails to question adequately why so many people, mainly in low income groups, resort to such expensive forms of credit – people who are least able to afford high cost credit. It offers no critical analysis of moneylenders who can charge combined interest and collection charges at APR rates of up to 287.2%,” Brendan Hennessy added.
He also said that there appeared to be some contradictions from respondents in the report regarding accessing alternative forms of credit.
He referred to the fact that only 21% of those surveyed considered taking out (cheaper) credit before taking out a money lending loan. Yet 58% have savings in another institution
Elsewhere the report shows that 62% believe they could get credit from alternative sources. However 77% say they had been refused by a credit union or bank.
In its statement, the SVP said it appreciated that for many people moneylenders may appear to provide a convenient service but said people should be encouraged to consider their repayment costs in relation to their household budgets and to create a greater relationship with their credit unions.
“The growth of 20% in customers of licensed moneylenders in the last six years must be a call to arms for people who genuinely want to improve financial awareness and financial inclusion among some of the most vulnerable households.”
The SVP also suggested that the Department of Finance needed to read the report while the Department of Education needed to create financial awareness courses for the schools’ curriculum in order to highlight the serious financial issues around moneylending.
The European Commission has obliged the Irish Government to take concrete steps towards making affordable financial services more accessible to the very people and families who use moneylenders, the SVP noted.
“Credit Unions and other low cost, community oriented credit institutions also have key roles to play. The report should surely pose many questions for the Central Bank’s Consumer Advisory Group and all those involved in promoting financial inclusion.” Brendan Hennessy commented.
