The Financial Regulator has issued a new statutory Consumer Protection Code for Licensed Moneylenders following the Regulator's report on the Licensed Money Lending industry published in March 2007. The report found that 80% of consumers that use moneylenders do not compare interest rates and that 71% did not know the interest rate that they were being charged. The Code will require moneylenders to assist individual consumers in understanding repayment methods, interest payments and to warn consumers about the high-cost nature of such loans. In addition, moneylenders will be obliged to inform consumers of the actual repayment cost of every €100 borrowed which is a move away from the more common use of an Annual Percentage Rate.
Another new feature of the Code is the requirement for moneylenders to demonstrate that the credit agreed with a consumer is suitable for that consumer's needs and to provide consumers who experience difficulty in meeting repayments with information on debt counselling services such as the Money Advice and Budgeting Services Office (MABS).
The general principles of the Code will come into effect on 1 January 2009, and the remainder of the Code some time later in 2009.