Moneylenders still setting rates of 200%

Licensed moneylenders are charging an annual percentage interest rate (APR) of almost 200 per cent, three years after a promise from the Director of Consumer Affairs, Ms Carmel Foley, to drive the charges down.

Currently around €57 million is on loan to low-income families from 57 licensed moneylenders around the State.

Ms Foley, who has responsibility for issuing licences to moneylenders, last night called on banks and credit unions to introduce a "social lending" policy which would provide affordable credit to such families.

Three years ago Ms Foley told The Irish Times she believed the rates charged by licensed moneylenders were too high and she pledged to try to reduce them.

However, some lenders are still charging rates of 196.5 per cent APR, just as they were in 1999.

The average cost of a loan has remained relatively static, €30 on €100, said Ms Foley.

"I recognise that this cost is high compared to mainstream bank loans. However, to restrict this business would result in an increase in the use of unlicensed moneylenders, which is unregulated and not in the interest of consumers. The main issue here is that the people who avail of this service have no alternative," she said.

The amount of money currently on loan has decreased from £60 million (€76 million) at the end of 1999. This is attributable to the fall in the number of lenders' licences issued, from 64 in 1999 to 57 in the last licensing round.

One of the moneylenders in operation three years ago has been taken over by a bank and is no longer required to hold a licence. That company had around €10 million on loan.

Ms Foley said she has studied the annual accounts of many lenders in recent years. The profits in the sector were not excessive, she said. However, she added, even a minor rescheduling of a loan period can push up the APR significantly.

"For example, a movement of one week either way in the length of the loan can affect the APR by approximately 15 per cent."

The Register of Authorised Moneylenders shows that Master Credit Ltd, based at 76 Dame Street in Dublin, charges the highest APR, at 196.50 per cent over 25 weeks. The company also charges 4 cent in the euro collection charge.

The second-highest rate is charged by three moneylenders: the Irish Credit Supply Company, based in Kylemore Road, Ballyfermot; Ancar Estates in East Point, Dublin; and Southside Finance Limited, Shankill, Dublin. All three charge an APR of 188.40 over 20 weeks. Ancar and Southside Finance Ltd charge 7 cent in the euro for collection while Irish Credit Supply charges 5 cent.

The third-highest rate is charged by Wicklow Finance in Greystones at and APR of 185.20 per cent over 21 weeks. The company charges 2 cent in the euro for collection. Next is Fincred Ltd of Belvedere House, Dublin, charging 184.50 per cent APR over 22 weeks, with a charge of 3 cent in the euro for collection.