Central Bank must better protect vulnerable borrowers

The financial trauma experienced by large numbers of people has certainly been a gift for these loan sharks.

But it will come as a shock to many that the main reason the customers cite for using them is not because they have been refused credit elsewhere, but because of convenience.

Just 5pc of customers of moneylenders said they had been refused credit elsewhere when surveyed on why they used a moneylender, as opposed to the likes of a credit union.

That's according to the 'Report on the Licensed Moneylending Industry' issued by the Central Bank in 2013.

The convenience of having money given to you on your doorstep to fund a Communion or to pay off some other debt is just too tempting.

And it seems that being given a new loan before the old one is paid off - something that is illegal - is a prominent practice.

Around a quarter of those with moneylender loans were illegally offered a new loan before the old one was paid off.

On the basis that there were 360,000 customers of moneylenders in 2013, it is fair to assume that between 90,000 and 100,000 people were illegally offered refinancing of a loan.

Given that explosive finding, you would expect more regulatory and enforcement action by the Central Bank to clamp down on this activity.

It is worth noting the customers of moneylenders tend to be vulnerable, on low incomes, and often have low levels of financial literacy.

Provident was only found to be offering rolled-over loans when the activities of the company in Letterkenny were brought to the attention of the Central Bank by whistleblowers, through Sinn Féin's Pearse Doherty.

The fine imposed by the Central Bank of €105,000 after 117 loans in Letterkenny were found to have been illegally refinanced was considered by many to have been paltry.

The Central Bank fine prompted one Donegal couple to take a case to the Ombudsman.

Provident is part of London Stock Market-quoted company Provident Personal Credit. It is valued at over £4bn (€5.52bn) and it recorded profits of £175.6m (€242.2m) last year.

Asked what efforts it had made to investigate the refinancing of moneylending loans around the country, the Central Bank would only say it was not in a position to discuss individual firms or investigations.

But the finding of the financial services ombudsman that the Donegal couple should have their loan written off by Provident and get compensation, because they had loans illegally refinanced, opens the way for thousands of others to make similar claims.

That is one in the eye for the moneylenders.