The Director of Consumer Affairs, Ms Carmel Foley, has renewed licences this week to moneylenders who are permitted to charge interest at an annual percentage rate (APR) of almost 200 per cent in some cases. Ms Foley, who is responsible for issuing moneylending licences and who authorises the APR that moneylenders can charge, has reissued 66 licences for the period August 2000 to July 2001.
The new moneylenders register shows that 13 of the companies listed charge annual rates of over 180 per cent on loans over periods of between 20 and 25 weeks. The rates range from 18.5 per cent to 196.5 per cent.
Responding to criticism that her office was giving some moneylenders a licence to exploit families on low income, Ms Foley said some of the registered moneylenders obtained very low margins, even on some of the higher interest rates.
"Some of the annual percentage rates look huge, but when applied over a period of weeks it doesn't look so huge," she said.
Ms Foley said if she were to pressurise moneylenders into significantly reducing the APR they charged, they would probably go out of business, forcing low-income families to go to illegal moneylenders.
"It is the unlicensed moneylenders or `the guys with the crowbars' who are the real problem. Licensed moneylenders at least have to supply written agreements and record their figures and are not allowed to provide top-up loans," she said.
The company that currently charges the highest APR is R & P Credit Ltd, of 126 South Circular Road, Dublin, at 195.6 per cent on loans over 21 weeks. The next-highest is Master Credit Ltd, of 76 Dame Street, Dublin, which charges 196.5 per cent on a loan over 25 weeks. The company also charges a collection fee of 4p in the £.
However, Jordan Estates Ltd, which previously charged the highest APR of 197 per cent on loans over 20 weeks, has reduced its rate to 159.4 per cent on loans over 26 weeks. It has introduced a collection fee of 9.9p in the £.
The collection fee, which varies from nothing to 15.5p, is charged when a customer chooses to have repayments collected from home instead of paying directly to the office of the moneylender. On the 15.5p charge, the moneylender gets £1.55 for every £10 repaid at the doorstep.
It was revealed earlier this year that an estimated £60 million was on loan to thousands of low-income families from the licensed moneylenders.
Ms Foley said at the time that she had threatened to refuse an application for a licence unless the moneylender agreed to reduce the proposed level of credit, which the moneylender concerned did. She called on the banks and the credit unions to make loans more accessible so that people would not have to borrow from elsewhere.