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 Header Item Company Law (Continued)
 Header Item Ceisteanna ó Cheannairí - Leaders' Questions

Thursday, 17 December 2020

Dáil Éireann Debate
Vol. 1002 No. 7

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  12 o’clock

(Speaker Continuing)

[Deputy Damien English: Information on Damien English Zoom on Damien English] It involves a review of the Duffy-Cahill report's recommendations as well as other recommendations from the unions. We are doing all of that.

We will move forward in a positive way if that is effective, but I remind the Deputy that previous reviews over the past four or five years have referenced the fact that there is already a great deal of legislation in place - company law and employment law - to protect employees because we value that as a country. We need to determine why that legislation is not always utilised to its full potential.

  Written Answers are published on the Oireachtas website.

Ceisteanna ó Cheannairí - Leaders' Questions

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty As this is the last sitting before the Christmas recess, I will begin by wishing the Ceann Comhairle and all the staff of the Houses of the Oireachtas a very happy Christmas. From ushers to staff in the Bills Office, the canteen and everywhere else throughout the complex, they do incredible work and deserve our thanks, particularly at this challenging time. I also wish my colleagues in the Dáil and the Irish people a very peaceful Christmas. While we must remain vigilant to the threat of Covid-19 to protect ourselves, our families, our communities and one another, this Christmas provides us some relief and comfort in what has been a difficult year. Guím Nollaig Shona agus athbhliain faoi mhaise do na Teachtaí uilig.

Unfortunately, Christmas can be a time of much worry for some. Household debt is a problem for many workers and families. Due to Covid-19, tens of thousands of people have lost their jobs and many families are now facing their most difficult Christmas in years. The choices facing them are stark. How can they make Christmas special for their families and still pay the bills? Do they buy presents or heat their homes?

The Society of St. Vincent de Paul has described this year’s annual appeal as one of the most difficult in its 176-year history in Ireland. Difficulties for some present opportunities for others and there are always those who are ready to take advantage, provided they can. The Society of St. Vincent de Paul and others have warned about the threat posed this Christmas by licensed moneylenders and the extortionate interest rates they charge. There are an estimated 330,000 customers of moneylenders, with an average loan size of €556. For many in financial difficulty, moneylenders provide an easy line of credit but at a high cost. Licensed moneylenders are permitted by the Government to charge an annual percentage rate, APR, of 187%. That increases to 288% when permitted collection charges are included. The Citizens Information Board has stated that this extortionate level of interest leaves many borrowers unable to pay for life’s essentials and creates a vicious cycle of repeat borrowing. The majority of these borrowers are women; many of them are lone parents.

On 6 December 2018, I introduced the Consumer Credit (Amendment) Bill. It would introduce a statutory cap on the interest that moneylenders can charge. It has passed Second Stage and will be considered by the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach next month in oral hearings as part of the next Stage. It has already received submissions from interested parties.

Ireland is an outlier when it comes to the extortionate interest rates these moneylenders are permitted to charge. Interest rate caps are applied in 21 countries across the EU, including Germany, France and Italy. Many of these caps were introduced because their countries believed that it was morally unjustifiable to charge ultra-high interest rates, especially against the most vulnerable and those least able to repay. Germany described such rates as lacking moral legitimacy. Finland described them as unconscionable. In Ireland, however, anything goes and the sky is the limit. That is not acceptable and should not be tolerated.

A statutory cap on the interest rates that moneylenders can charge is supported by the Social Finance Foundation, the Citizens Information Board, the Money Advice & Budgeting Service, MABS, the credit union movement and charities such as the Society of St. Vincent de Paul.

Will the Government commit to working with the Opposition on this legislation? Can we see a new dawn in respect of moneylenders and the interest rates they charge? We have legislation that has passed Second Stage in this House and is before a committee. It can be improved on and I am open to suggestions. A cap needs to placed. Let us ensure that this is the last Christmas that moneylenders can charge up to 187% APR.

The Tánaiste: Information on Leo Varadkar Zoom on Leo Varadkar I thank the Deputy. I should mention that there are low-cost loans in place, for example, through credit unions. When I was the Minister for Social Protection, I established the "It Makes Sense" loan, which was a low-cost loan provided through credit unions. People could repay it through their weekly social welfare payments or, as was often the case, the household budgeting service. I am unsure as to whether the scheme still exists, but it was set up with the express purpose of providing access to low-cost loans, especially around Christmas, to people who needed them but would not normally get them from the banks or elsewhere.

I have not had a chance to speak to the Minister for Finance about the Deputy's proposed legislation in a while and I am unsure about what approach to it he wants to take. I do not have an objection to there being a cap on interest rates that were previously described as usury, that is, so high that they should have been illegal. When passing any legislation, however, we must consider the law of unintended consequences. While a law may be passed with a view to capping interest rates, there is a risk of an unintended consequence of creating a new, larger market for moneylenders. This is the type of balance we must get right in any such legislation.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty I thank the Tánaiste for his comments on supporting a cap on the interest charged by moneylenders. I acknowledge that Fianna Fáil supported the legislation two years ago, and while the Tánaiste's Government of the time did not, I welcome his remarks now.

We need to deal with this issue. The Bill is under pre-legislative scrutiny by the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach. Numerous submissions have been received that address the point the Tánaiste raised, which is a concern we all have about whether the Bill would open a market for illegal moneylenders. I will cite the University College Cork report, which is the expert report in this regard, "However, there is no empirical and undisputed evidence that interest rate restrictions result in an increase in illegal moneylending." It points to how the UK stopped exorbitant pay day loans and this did not result in illegal moneylending. As the Tánaiste acknowledged, there would still be the avenue of the credit union movement.

We need to put some urgency and commitment into this matter. As the legislation's sponsor, I am open to accepting amendments and to its provisions being introduced on a tiered basis, but let us work collectively as a House to ensure that 2021 is the year when the interest rates of moneylenders are capped and we stop accepting that moneylenders can charge customers 187% APR. We know what happens at this time of year. Moneylenders prey on people's vulnerability. The pandemic has exposed that in a greater way. There is a duty on us as legislators to protect individuals from this type of lending activity.

The Tánaiste: Information on Leo Varadkar Zoom on Leo Varadkar I will take the matter up with the Minister for Finance and see what his thinking on it is. There may well not be evidence, but the absence of evidence does not necessarily mean it is not happening. As the Deputy knows, moneylending at extortionate rates happens off the books, which makes it inherently unofficial, and there will not be evidence unless someone comes forward and says it is happening. However, I have an open mind on this matter. It may well be the right thing to do in 2021 to say that no lender can charge an interest rate above a stated amount, but we need to bear in mind that, if we decide to do so in an attempt to put a stop to high interest rates in the official lending market, we could create a new market for moneylenders and make the situation worse. I appreciate what the Deputy is saying, his good intent in this matter and the evidence and advices he has provided.

Deputy Alan Kelly: Information on Alan Kelly Zoom on Alan Kelly I wish a happy Christmas to the Ceann Comhairle, his staff and all the staff of the Oireachtas for the incredible efforts they have made this year. I also wish my fellow parliamentarians, both in opposition and in government, the same. In particular, I wish the Government my best wishes on its first Christmas together, although it seemed like Fianna Fáil and Fine Gael spent many together before.

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