Sinn Féin spokesperson on Finance Pearse Doherty TD has welcomed proposals published by the EU on 30th June to strengthen consumer protection in the credit market and for Member States to place caps on the cost of credit charged by moneylenders.

The Donegal TD said the proposals underlined the importance of Sinn Féin’s legislation to place a cap on the interest charged by moneylenders and highlighted the Irish Government as an outlier in its failure to protect borrowers and restrict the interest moneylenders can charge.

Teachta Doherty said the proposals gave fresh impetus to Sinn Féin’s Consumer Credit (Amendment) Bill which recently completed its pre-legislative scrutiny at the Finance Committee.

Speaking today, Teachta Doherty said:

“On 30th June the European Commission published proposals on new rules to increase consumer protection in the consumer credit market.

“Sinn Féin welcomes many of these proposals, such as their focus on new loan products such as “buy now pay later” schemes and improving the provision of pre-contractual information.

“Article 31 of the proposed Directive also call for Member States to introduce caps on interest rates, APR and total cost of credit charged to consumers by lenders, including moneylenders.

“As the proposal makes clear, caps on interest rates is common practice across the EU, and has proved beneficial to consumers.

“In 2018, 21 of 28 EU Member States had some form of interest rate restriction in place to protect low-income and vulnerable borrowers.

“While we were among the 21, the interest cap here applies to credit unions with no cap for high-cost credit, with the Government allowing moneylenders to charge interest of 187 percent, and 288 percent when collection charges are included.

“These ultra-high interest rates are unethical, immoral and trap vulnerable borrowers into vicious cycles of debt.

“These proposals highlight the failure of this and previous Governments to protect vulnerable borrowers from high-cost credit.

“They also underline the importance of Sinn Féin’s legislation to cap the total cost of credit that moneylenders can charge borrowers.

“This legislation passed Second Stage in the Dáil in 2018 and has just undergone pre-legislative scrutiny in the Finance Committee and would reduce the interest moneylenders could charge while increasing protections for consumers.

“These proposals by the EU highlight the failure of the Irish Government to protect borrowers from high-cost credit, and underlines the importance of my legislation to cap the interest that moneylenders can charge.

“These proposals should give fresh impetus to the Finance Committee to work together to progress my legislation to the next stage.”