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Central Bank probes moneylenders

Wednesday, March 06 12:24:37

The Central Bank today said it has conducted a random inspection of moneylenders and, while most are compliant, some were found to be in breach of codes.

The probe focused on whether consumers were being charged in accordance with moneylenders' authorised Annual Percentage Rates (APR) and costs of credit as set out in the moneylenders' licence.

This is a key focus for the Central Bank, given that moneylenders' loans can be significantly more expensive than other forms of credit.

Inspections were conducted in 9 of the 43 licensed moneylenders currently operating in Ireland. The aim of the inspection was to make sure moneylenders are meeting specific requirements of the Consumer Protection Code for Licensed Moneylenders and the Consumer Credit Act, 1995.

Overall, the inspections revealed that the vast majority of firms were in compliance with the provisions. This means that consumers were not charged over and above what they had agreed to pay and what the moneylender was allowed to charge.

In all cases the firms had indicated the high-cost nature of loans on loan documentation issued to consumers, as required under the Moneylenders' Code.

Some non-legislative and administrative errors were identified that are being followed up with firms on an individual basis. Examples include summing errors on the repayment schedules. The Central Bank said it will ensure that these firms put controls in place so that all consumer repayments are accounted for correctly and that refunds are given to consumers where necessary.

A number of firms did not have both their licence and licence appendix on display at their business premises, as required under the Act. Firms have been reminded that they must display their licence and licence appendix.

The Central Bank is currently considering possible enforcement actions in respect of a small number of firms based on concerns it has with the level of compliance with the relevant legislation arising out of these inspections. The firms concerned are being dealt with individually.

"We continue to focus on the area of costs and charges in this sector due to the high cost nature of these loans. While the majority of firms inspected were broadly compliant we discovered some serious issues in a small number of firms which we are pursuing individually with the firms," said Director of Consumer Protection, Bernard Sheridan.

"We also found cases where some consumers were provided with new loans before existing loans were repaid in full which is not necessarily in the consumers' best interests. Using short-term, high cost loans for longer-term needs should be avoided and I would encourage consumers in such a situation to contact MABS for help and advice."