Irish regular, The Central Bank of Ireland has published new regulations to strengthen protections for consumers of licensed moneylending services and to enhance professional standards in the sector.
Moneylenders will be required to include prominent, high-cost warnings in all advertisements for moneylending loans with an Annual Percentage Rate (APR) over 23 per cent. The warning must also prompt consumers to consider alternatives.
The new rules will limit the moneylenders’ contact with consumers and limit the offer and promotion of loans to consumers, giving greater control to consumers to decide when to be contacted by a moneylender.
Moneylenders will also not be permitted to make an unsolicited offer to apply for credit to consumers who have recently made, or are nearing, full repayment of a moneylending loan. Moneylenders will also be required to ensure that their marketing strategy is fair and reasonable.
There will also be a number of new requirements for people working in the sector, designed to enhance their professional standards. Where the loan is required for basic needs, such as accommodation or electricity, moneylenders must inform the consumer that a moneylending loan may not be in their best interest and provide contact information for the Money Advice and Budgeting Service (MABS).
Director of Consumer Protection, Gráinne McEvoy, said “It is important that people who use moneylenders are fully aware of the high cost nature of their loans. By strengthening the rules, we are providing the customer base with further protections and raising the expected professional standards in this industry.”
“Given the high interest rates associated with these loans, I would strongly advise consumers to consider other options before using the services of licensed moneylenders, and to never use an unlicensed moneylender. At this time of financial stress for so many Irish households, I would also encourage people in financial difficulty to seek advice, guidance and assistance from MABS.”
The regulations will come into effect on 1st January 2021. However, recognising the financial effects of Covid-19 on people, the ‘high-cost warning’ requirement in respect of advertisements for moneylending loans with an APR in excess of 23% will come into effect on 1st September 2020.