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.