Cross Border Pressure On Moneylenders

Credit card companies and moneylenders will soon be forced to adopt a new code of practice across the Irish Republic - while in Northern Ireland, consumers are being warned off using unlicensed moneylenders.

From January, those providing credit in the South they will have to provide customers with detailed information on the cost of repayments, demonstrate that the credit agreed with customers is suitable for their needs, and provide information on debt counselling services such as the Money Advice and Budgeting Services (Mabs).

The Irish Financial Regulator has published the new statutory code for licensed moneylenders today.

It comes following consultation with the industry and consumers earlier this year, which found that 80% of consumers do not compare interest rates when taking out a loan and 71% did not know the interest rate they were being charged.

Mary O'Dea, Consumer Director of the Financial Regulator, said: "It will require moneylenders to assist each individual consumer in understanding the method of repayment and all related costs and charges. The code introduces a new measure requiring moneylenders to inform consumers of the actual repayment cost of every €100 borrowed."

The code also outlines a requirement to disclose any high-cost credit, and a requirement to provide consumers who find difficulty in meeting their repayments with information on debt counselling services.

Meanwhile, there is also a push on in Northern Ireland, where consumers, anxious over the cost of Christmas, are being urged to avoid illegal money lenders as a means of finding funds.

The Northern Ireland Department of Enterprise, Trade and Investment's Trading Standards Service is advising consumers, who are unable to access credit through the usual mainstream channels such as bank loans, credit cards etc, not to resort to illegal money lenders.

Illegal money lenders, or 'loan sharks' as they are more commonly known, are unlicensed and operate outside the law.

The agency said this week that: "It is a criminal offence for a person or business to engage in activities that require a consumer credit licence when they are not a licensee".

Jimmy Hughes of Trading Standards said: "The best advice for dealing with 'loan sharks is 'don't'.

"They're unlicensed moneylenders who charge very high interest rates and sometimes use threatening behaviour and violence to frighten people who cannot repay their loan.

"If an individual has borrowed money from a 'loan shark' there is no legal obligation to repay the debt as the loan is unenforceable. If a lender is not licensed by the Office of Fair Trading (OFT) then they have no legal right to recover the debt.

"Loan sharks sometimes frighten people by saying they will be prosecuted and even sent to prison if they do not pay up.

"This cannot happen. Not repaying a loan from an unlicensed lender is not a criminal offence. Any lender, licensed or unlicensed, who harasses a consumer is breaking the law," he said, urging that consumers should report any 'loan shark' to the PSNI if there are threats or violence.

(DW)(BMcC)