Sinn Féin leader Mary Lou McDonald has called for a cap on interest rates that legal moneylenders can charge, describing such companies as “vultures”.
Ms McDonald highlighted the imminent entrance of UK moneylender Amigo Loans to the Irish market. Amigo has been granted a licence to operate by the Central Bank, offering an interest rate of 49.5 per cent.
She said this was “absolutely extortionate”. And it is disgraceful that the State sanctioned such companies to operate in Ireland, even though it was described as “mid-cost credit”.
But she said a Social Finance Foundation report showed that moneylenders licensed in Ireland can charge interest rates of 187 per cent and up to 287per cent with collection charges.
The only interest rates capped in Ireland are those charged by credit unions. “We do not apply any cap on moneylenders,” she said.
She described the granting of a licence to such loan companies as “State-sponsored robbery” and said it is time to bring in legislation to control such firms.
Amigo Loans offers credit to those who are typically excluded from mainstream finance because of a poor credit history. They can access up to €10,000 within 24 hours with the company.
However unlike other firms Amigo requires a guarantor, usually friend or family to make repayments in the event the borrower cannot.
Ms McDonald said that vulnerable unemployed people or those “up early and working very hard” but on low wages, are being forced to borrow from such moneylenders.
They are unable to make ends meet. And their only option is “moneylenders and loan sharks”, particularly in the run up to Christmas.
These lenders are getting rich on the back of hard-pressed people, she said.
“They can do that because the State allows them to do that.”
Raising the issue in the Dáil, the Dublin Central TD said her party had previously brought in legislation to cap interest rates. But it was rejected by the Government.
Taoiseach Leo Varadkar acknowledged that rates of 49.5 per cent are “very high”. And he said the Government would examine whatever legislation Sinn Féin brought forward on the issue.
He said, however, that “ultimately people have personal freedom. And if we restrict people from taking out loans, that’s a restriction on their choice and their freedom.”
He said it might be required on occasion to restrict freedom of choice, “but we need to get that balance right”.
He said there are alternatives to such operators, including the credit union.
“Low-cost loans are available from the credit union through the It Makes Sense scheme,” Mr Varadkar added.
“I appreciate it is not available in every credit union, but you don’t have to go to the closest credit union or be a member of a particular credit union to avail of that loan.”
