The Dáil has heard a call for a cap on licensed moneylenders and a clampdown on unlicensed lenders targeting vulnerable families in the run up to Christmas.
According to Mr President Mary Lou McDonald, while unlicensed creditors are charged with "punitive" and "disgusting" interest rates, there is also a licensed money lending industry whose practices are "equally repulsive".
She made her comments amid reports that the UK monetary amigo loan is set to move into the Irish market.
This company targets loans to individuals with poor credit – who are backed by friends and family – at an interest rate of almost 50%.
The lender, which has more than 200,000 customers in the UK, has been approved by the Central Bank for a moneylending license to operate in Ireland.
Mary Lou McDonald said the Central Bank has sanctioned the company to offer loans with interest rates of up to 49.9% to people who have been excluded from accessing mainstream finance.
"They say that mid-cost credit, I would call it daylight robbery and they are not far from the only ones in this game," she said.
The TD referred to a recent report from the Center for Co-operative Studies at UCC – on behalf of the Social Finance Foundation – which found that moneylenders are licensed to charge interest rates of up to 187%, which when collecting charges are added, rises to 287% APR.
"The report also finds that a total of 21 of 28 EU Member States apply caps on high cost credit, which includes Ireland, but the only cap we apply is for credit unions – we do not apply any caps on moneylenders," she stated.
Amigo Loans offers loans of up to £ 10,000 (€ 11,334) in the UK with a typical interest rate of 49.9%.
This means that a loan of £ 5,000, repaid over 36 months, will cost some £ 8,782 to repay, according to figures in the Irish Times.
However, € 5,000 borrowed from a local credit union at a rate of 8% will cost just € 5,640.55 to repay over the same term.
"Money lenders are getting rich from the backs of hard pressed families," Ms McDonald said in the Dáil today.
Taoiseach Leo Varadkar said the Central Bank and not the government issues licenses for financial services, but he agreed with Ms McDonald on the levels of interest charged.
He also urged those considering taking out loans to look for alternatives such as the "Make Sense Program" project run by Credit Unions and the Department of Social Welfare which offers low cost short term loans.
In a statement today, the Central Bank said it can not comment on its involvement with individual firms.
But it said that to operate as a moneylending firm in Ireland, a company requires a license from the Central Bank in accordance with the Consumer Credit Act 1995.
It said that since assuming responsibility for the regulation of the sector in 2003, the Central Bank has not allowed the maximum APR charged within the sector to increase, nor has it allowed practices such as payday loan to enter the Irish licensed moneylender market.
The Central Bank stressed that a strong framework for protection is in place for consumers who choose to benefit from licensed moneylenders.