Explainer - How does the Central Bank protect people who use moneylenders?
Moneylenders give people small loans, over short time periods, charged at high interest rates. This means that using a moneylender is one of the most expensive ways you can borrow money. Moneylenders are usually firms that call door-to-door (home collection firms) whose main business is lending money. However shops or catalogue companies that offer high-interest credit must also be licensed as moneylenders. As at the end of 2019, there were 38 licensed moneylenders in Ireland with approximately 300,000 customers. Of these, 28 (74%) were door-to-door moneylenders while two (5%) were catalogue companies. The remainder were other types of moneylender such as firms which provide goods on credit.
Who regulates moneylenders in Ireland?
The Central Bank of Ireland regulates the licensed moneylending industry in Ireland. This means we set rules and standards that moneylenders must follow.
You can read the rules in the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Licensed Moneylenders) Regulations 2020.
As a regulated sector, moneylenders require a licence from the Central Bank to operate. It is illegal for a moneylender to operate without such a licence. Licensed moneylenders authorised by the Central Bank are listed on our Register.
How does the Central Bank protect moneylending consumers?
Licensed moneylenders play an important role in society for people who can’t access alternative forms of credit. However, at the same time, they have a duty to lend responsibly and treat their customers fairly. There is a strong framework in place to ensure moneylenders act in the best interests of consumers. For example, moneylenders must:
- Highlight the high cost of their loans.
- Be open about all of their charges.
- Not penalise you for making extra, missed or late payments.
- Include a prominent warning in all advertisements for high-cost credit that a moneylending loan is a high cost form of credit and prompt you to consider alternatives.
- Provide information that prompts you to consider if a moneylending loan is your best option and, where the loan is required for immediate basic needs, provide information to prompt you to consider potential State supports.
- Provide you with the total repayment information if you have taken out more than one moneylending agreement with that moneylender.
How do I get additional support?
If you are experiencing financial difficulty and require support and guidance you can contact the Money Advice and Budgeting Service (MABS).
See also: