SVP calls for 'high-cost loan' warning on moneylender ads
The Society of St Vincent de Paul (SVP) has called for all licensed moneylenders to carry a tobacco-style warning on their advertising and literature.
The charity has made a submission to the Department of Finance seeking the warning as well as the provision of alternatives for customers on the advertisements.
It says that “Warning: This is a high-cost loan” should feature on the ads, as well as advice for people to check their options before borrowing.
SVP estimates that there are 330,000 customers of moneylenders in Ireland.
In its submission, it said it was "astonishing" that no such warnings on ads for moneylenders.
According to the Central Bank, while moneylenders are required to provide information about the high-cost nature of the loan to their customers, this is typically provided in the
moneylending agreement which must be signed by the customer, and is not a requirement for advertising the loans.
SVP says that there should be a maximum cost of credit under law which can be charged by a moneylender and that consumers should have better access to sources of low-cost credit. This could be achieved through the introduction of a statutory interest rate cap, the charity said.
“This should be done at the same time and in conjunction with the introduction and strengthening of other measures to protect vulnerable customers of moneylenders,” said Caroline Fahey, SVP Head of Social Justice.
These other measures should include better access to sources of low-cost credit for low-income households, enforcement of the Consumer Protection Code for Moneylenders and better protection of customers of moneylenders, including better information, financial education and more inclusive mainstream banking services.
“The main considerations for SVP and the people we assist are the total cost of credit, including charges; how manageable the repayments are; the alternatives available;
the provision of clear information which will allow customers to make informed decisions about taking out moneylender loans and the introduction, strengthening and monitoring
of measures to protect customers of moneylenders.” she said.
Kieran Stafford, SVP National President said: “SVP members regularly report inappropriate lending to very vulnerable households who do not have the capacity to repay the loan.
Living on a low income and having a poor credit rating limits the options for people who are trying to access credit.
"Moneylenders are meeting a need for access to credit but often at a cost which people who are better off and who have other options would baulk at.
"Repaying a high-cost loan is a very heavy burden for households that are struggling and can lock them into a cycle of debt and poverty," he said.
