Call for ‘smoking style’ warnings on money lending services

All money-lending services should carry warnings about the high costs of loan repayments on all advertising, the Society of Saint-Vincent-de-Paul (SVP) told the government.

Like the tobacco packaging introduced with health warnings, any advertising or money-lending documentation should include a clear warning of the high cost of the loan, according to an SVP presentation to the finance ministry.

The charity suggested that messages such as “Warning: this is a high cost loan” be placed on advertisements for lenders.

SVP, which supports people experiencing poverty and homelessness, has consistently called for greater regulation of pawn shop services in recent years.

The charity said that in Ireland around 330,000 people use pawn shops.

In presenting the charity to ministry officials, it asked for a statutory maximum cost of credit that can be charged by a lender. The state could introduce an interest rate cap on loans, according to the communication.


Currently, lenders must provide information about the onerous nature of loans to potential clients, according to the rules of the Central Bank. But this is usually stated in the money loan agreement signed by the client, and it does not need to be included in the advertisements.

Caroline Fahey, vice president of social justice, said stronger measures were needed to protect vulnerable clients using loans from lenders.

“Other measures should include better access to low-cost sources of credit for low-income households, the application of the Consumer Protection Code for pawn shops and better protection of the clients of pawn shops, in particular. better information, more inclusive financial education and traditional banking services, ”she said.

From February 2013, cigarette packs were required to carry graphic images, as well as health warnings, informing customers of the harms of smoking. In early 2017, new legislation introduced standard plain packaging for tobacco products, removing the mark and making health warnings more visible.


Kieran Stafford, president of the SVP, said charity volunteers regularly meet with lenders providing bad credit loans to vulnerable households, who do not have the capacity to repay the loan.

“People tend to resort to lenders when they have limited access to other sources of credit and they may fear cutting themselves off from that source of credit by reporting abuse in the industry,” he said. .

Low-income households can have bad credit, which limits where they can access loans, Stafford said.

“Paying off a high-cost loan is a very heavy burden on struggling households and can lock them into a cycle of debt and poverty,” he said.

“Pawn shops tend to engage in heavy advertising when low-income households are under financial pressure, such as back to school and Christmas, and it is important for customers to know at first glance that advertisements they see are meant for high cost credit, ”says Mr. Stafford.

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