Moneylenders ‘ripping off’ people with ultra-high interest rates – Sinn Féin

Party is seeking amendment to legislation proposing 36% cap on APR for borrowers

Sinn Féin wants to cap the cost of credit moneylenders can charge at no more than three times the market average.

The party's finance spokesman, Pearse Doherty, made a submission to the Oireachtas joint finance committee, which is scrutinising legislation that proposes a 36 per cent annual percentage rate (APR) cap in a bid to protect vulnerable borrowers.

Mr Doherty wants, however, to amend the legislation to move away from a specific limit to a relative rate of "no more than three times" the cost of credit that exists in the market, to be determined by the Central Bank and introduced on a phased basis.

“The finance committee now has an opportunity to end the unjustifiable status quo that allows moneylenders to rip off consumers with ultra-high interest rates,” he said.

Currently, moneylenders can charge interest of 187 per cent, or 288 per cent when collection charges are included.

“These ultra-high interest rates are unethical, immoral and trap vulnerable borrowers into vicious cycles of debt,” Mr Doherty said. “In 2018, 21 of 28 EU countries had some form of interest rate restriction in place to protect low-income and vulnerable borrowers,” he added, noting Irish borrowers are given no such protections.

Mr Doherty brought forward the Consumer Credit (Amendment) Bill back in 2018 in an attempt to limit moneylenders’ interest rates.


Minister for Finance Paschal Donohoe, however, opposes the introduction of an APR cap on the grounds that it may damage the functioning of a legitimate moneylending market and that APR may not capture the fees and additional costs that go with some short-term loans.

Mr Donohoe said last month he plans to bring proposals to Cabinet to “gradually” lower the current 187.2 per cent APR cap on licensed moneylenders’ loans.

As part of its scrutiny of the legislation, the finance committee heard from representatives of the Irish League of Credit Unions (ILCU), Free Legal Advice Centres (Flac) and the Money Advice and Budgeting Service (Mabs).

Flac policy analyst Paul Joyce said his organisation favoured the introduction of a "tiered" system of maximum interest rates that would vary depending on the proposed length of the individual loan, rather than a "one size fits all" single rate.

Ed Farrell, chief executive of the ILCU, said: "Credit unions know first-hand how [moneylenders] trap families and individuals in a lifetime of debt. Everyone, whether employed or not, should have access to affordable credit."

The State’s largest moneylender, Provident Financial, last month announced it planned to cease trading on foot of more difficult trading conditions and growing customer complaints.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times