Taoiseach pledges to examine Sinn Fein demand for interest rates cap
Leo Varadkar was responding to a call from the party’s president Mary Lou McDonald.
The Taoiseach has pledged to examine a Sinn Fein demand for a cap on interest rates charged by moneylenders in Ireland.
But Leo Varadkar stressed it was important to strike a balance, insisting the Government should not overly restrict the freedom of choice of individuals to take out loans.
Mr Varadkar was responding to a call from Sinn Fein president Mary Lou McDonald to cap the rates set by some moneylenders.
Today at #LeadersQuestions @MaryLouMcDonald has raised the issue of moneylenders charging punitive interest rates.— Sinn Féin (@sinnfeinireland) November 28, 2018
The Central Bank has sanctioned companies to offer loans with interest rates of up to 49.9% to people who have been excluded from accessing mainstream finance. pic.twitter.com/ZMUlkMsAnl
Mrs McDonald said the lack of a cap – other than on rates set by credit unions – meant the Irish state was essentially facilitating “daylight robbery” of its citizens.
Sinn Fein raised the issue amid reports that UK moneylender Amigo Loans was set to move into the Irish market next year, offering a mid-cost interest rate of 49.9% APR for customers who had difficulty securing mainstream credit.
During leaders’ questions in the Dail, Mrs McDonald highlighted a report by the Centre for Co-operative Studies that found that moneylenders in Ireland were licensed to charge interest rates as high as 187% – rates that can rise to 287% APR when collection charges are factored in.
There is no excuse for a government standing over such a scandalous situation Mary Lou McDonald
“We do not apply any cap on moneylenders, that is why at this time of the year moneylenders go door to door delivering leaflets, preying on the vulnerability of people coming up to Christmas and charging these kinds of extortionate rates,” she said.
“Because moneylenders are getting rich on the back of hard-pressed people who are simply trying to provide for their families and they can do that because the system in place allows them to do so – it’s state sponsored robbery Taoiseach.
“And there is an urgent need to introduce a cap on interest rates that these types of outfits can charge.”
She added: “There is no excuse for a government standing over such a scandalous situation.”
The Sinn Fein leader also called for better regulation to police illegal loan sharks in the state.
Mr Varadkar highlighted that decisions on which lenders were granted licences were made by the Central Bank, insisting that independent regulation of the financial services sector was vital.
He also pointed out the alternatives on offer to people, in particular low interest loan options provided by credit unions.
But, in regard to a potential cap on high interest rates, Mr Varadkar told Mrs McDonald: “We will examine any legislation that you may wish to bring forward.
“We do need to strike a balance here. Ultimately people have personal freedom and if we restrict people from taking out loans, that’s a restriction on their choice and their freedom.
“Perhaps it is the case that on occasion we need to do that and we need to restrict people’s freedom and choice in order to protect themselves from being exploited, so perhaps we may need to do that, but we need to make sure we get that balance right.”