Cantillon

Inside the world of business

What the moneylenders charge

For most people, even working out how to find a moneylender would lead to quite a bit of head-scratching. The reality for some, however, is that such enterprises habitually represent the only available bridge between being financially hamstrung and having a little bit of spending power. Desperation for cash, presumably, makes it easier to swallow the triple-digit interest rates that might be involved.

The Central Bank yesterday published the results of an inspection it conducted of nine licensed moneylenders, finding that most firms were “broadly compliant” with applicable regulations. An important word here is “licensed”. The 43 licensed firms that operate in the Republic offer little clue as to how business works for unlicensed moneylenders, or loan sharks, and their unfortunate clients.

The Central Bank maintains a register of the moneylenders that are licensed and also provides up-to-date information on the interest rates they charge. The latest information indicates that some borrowers are paying a mind-blowing APR (including collection charge) of 287 per cent on loans with terms of 20 weeks. The charges applied by unlicensed lenders must be truly frightening.

While the Central Bank’s survey found most licensed moneylenders are obeying the rules (it will pursue those that are not), the regulator also found some evidence of customers being advanced new loans before the term of their first loan has expired. Using characteristically mild language, the bank observes that this practice “is not necessarily in the consumers’ best interests”. We would perhaps go further and suggest that such double-decking of loans must surely be laying a paving stone on the path to financial ruin.

The Central Bank advises that using short-term, high-cost loans to fund long-term needs “should be avoided” and says the Money Advice Budgeting Service (Mabs) may be able to help people in such situations.

Moneylenders will always be with us, with some members of society always feeling they have nowhere else to turn. This being the case, it would be welcome if greater pressure could be placed on lenders when it comes to the interest rates they apply. Unlicensed lenders will always exist in their own murky world, but a little more moral leadership from their licensed brethren, with the lead of the Central Bank, would be more than welcome.

How to get ahead in a man's world

It’s probably not often that Christine Lagarde finds herself in the same sentence as Anna May McHugh, the arch-duchess of all ploughing championships, but in the spirit of International Women’s Day tomorrow, Cantillon is pleased to provide the occasion.

Lagarde has gone about as high as she can in her chosen career (having previously done the same in law and politics), achieving milestones for gender balance along the way. It is less than two years since she became first female head of the IMF, following in the footsteps of Dominique Strauss-Kahn. Before that, she was the first female finance minister of a G8 country and, before that again, the first female chairman of international law firm, Baker McKenzie. It would have been nice if her gender had not even been worthy of comment when she was appointed to these roles, but that is not so.

Making the jump from Paris and Washington to Kildare and Laois, we encounter the indomitable McHugh, who was this week named Veuve Clicquot Businesswoman of the Year.

Glittering in coral at a glamorous reception in the residence of France’s (female) ambassador to Ireland, Emmanuelle d’Achon, the managing director of the National Ploughing Association spoke of the difficulties in getting men to take her seriously in her younger days, before they realised she knew her stuff. Now nearing her 80s and presiding over an enterprise that generates visitor spend of more than €30 million a year, McHugh no longer has such problems and has learned a few tricks through the years. She described how one can “bring the men along” if the matter is approached correctly, prompting knowing applause from her mostly female audience.