Consumer Credit (Amendment) Bill 2021 will restrict rate charged by moneylenders, modernise the sector and better protect those in need of short-term money lending – Donohoe

19th July, 2021

The Government has approved the drafting of the Consumer Credit (Amendment) Bill 2021; the main purpose of which is to restrict the total cost of credit on moneylending loans.

It does so by introducing a cap on the interest rate a moneylender can charge on a loan, allowing for that rate to be adjusted in future by Ministerial Order, and prohibiting moneylenders from charging for home collection services.

The Bill also contains a range of measures to modernise and streamline the sector, including:

  • Allowing repayment books to be maintained online;
  • Allowing licenses to be issued for periods of five years at a time rather than one;
  • Removing the requirement for moneylenders to register for a particular District Court area, and register State-wide instead; and
  • Changing the term ‘licensed moneylender’ to ‘High Cost Credit Provider’ to differentiate between licensed and unlicensed moneylenders.

The legislation follows a comprehensive review of the moneylending sector undertaken by the Department of Finance and the proposals take into account the submissions received from the public consultation held by the Department in respect of the issue.

Alongside the General Scheme of the legislation, Minister Donohoe is publishing a Moneylending Proposals Report on reform of the moneylending sector.

Speaking today, the Minister said: ‘This Bill will seeks to ensure fairness for consumers in terms of the rate charged by moneylenders, while also allowing for moneylenders to continue to operate where that service is needed. By simplifying and reducing the rate that is being charged and taking steps to modernise the sector, we can better protect those who avail of these short-term services’.


Notes to the Editor

In May 2019, the Department of Finance launched a public consultation to gather views on whether the Government should introduce a statutory interest rate cap on licensed moneylenders and related matters.

The responses to this consultation were studied and form part of the basis for the Moneylending Proposals Report, which gives rise to this General Scheme.

The legislation proposes two rate caps, one for cash loans, and one for running accounts (these are similar to tied credit cards, and are often used by catalogue companies).

For cash loans, a simple interest rate of 1% per week to a maximum of 48% per annum on the amount borrowed is proposed.  This is straightforward and transparent and appropriate for the sort of loans concerned.

Cash loans will also be subject to a maximum duration of 12 months.

For loans provided on a running account basis, nominal interest of 2.83% per month on the outstanding balance will be allowed. 

Next steps

The Minister for Finance will write to the Chair of the Committee on Finance, Public Expenditure and Reform and the Taoiseach regarding pre-legislative scrutiny. Officials will engage with the Office of the Parliamentary Counsel to the Government to begin drafting the legislation on the basis of the General Scheme published today.

Information on the market

The Central Bank register currently lists 35 licensed moneylenders.  This figure includes Provident Personal Credit, which announced on 10th May that it would cease operations in Ireland and the UK.

On 28th June, Provident has advised customers that it has stopped collecting payments. Any remaining balance which a borrower has at that date has now been written off.

The Central Bank estimates that there were 313,500 customers with moneylending loan balances outstanding in 2018.

Consumer Credit (Amendment) Bill 2021 will restrict rate charged by moneylenders, modernise the sector and better protect those in need of short-term money lending – Donohoe