Failure to deal with top-up loans leaves burden on poorest families

16 June 2015

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It is reported today that the Financial Services Ombudsman’s Bureau has upheld a complaint by a Donegal couple who complained about their loan from a leading moneylender being topped up before they had fully repaid an existing loan.

The Consumer Credit Act 1995, which regulates moneylending in Ireland, forbids such topping up of existing loans or issuing new loans to clear older ones. FLAC Director General Noeline Blackwell said the FSO ruling was an important clarification but pointed out that the loan in this case was one of 117 topped-up loans from the same lender identified by the Central Bank as being in breach of the law last December. After that Central Bank finding, the couple decided to make a complaint to the FSO.

Ms Blackwell commented: “For FLAC there are two main concerns here. First, it is important that people know their legal rights in this area and are aware of relevant legal developments. FLAC has recommended that the Financial Services Ombudsman publish its decisions on an anonymised searchable database, to ensure people have proper and easy access to them.

“Secondly and worryingly, last December the Central Bank did not require any structural change from the moneylender involved, Provident Personal Credit Ltd. So once it paid a fine, Provident, which is one of the biggest moneylenders in Ireland, was free to carry on business as usual. It was not required to review its loan books for any other breaches or to change its policies to ensure it could not occur again.”

A Central Bank survey in November 2013 revealed that 23% of moneylenders’ clients had been offered additional credit before the balance on previous borrowings was fully repaid. FLAC has concerns that this known issue is not being addressed by regulators.

“Unfortunately, it’s the families who can afford it least who are paying for this failure to clamp down on illegal practices,” said Ms Blackwell.  “We know that the poorer you are, the harder and the more expensive it is to borrow money. The Central Bank’s own study tells us nearly a quarter of customers reported being refused credit from a credit union or banks. So there is a growing gap out there being filled by licensed moneylenders, which can legally charge up to 187.2% APR.  People on low incomes don’t have ‘rainy day’ money and because they cannot access more affordable credit, they are paying through the nose to cover life events – Christmas, school expenses and so on.”

In recent years, FLAC and groups such as MABS and the Society of St Vincent de Paul have highlighted problems for people who must resort to moneylenders. A study issued by UCD’s Geary Institute has proposed a new personal microloan service to help those who have no access to other loan finance.

“It is hard to understand why a problem so clearly flagged by the Central Bank in December last year has still not been addressed, especially when it exacerbates the position of some of  the poorest households in Ireland,” concluded Ms Blackwell.



Editors’ notes:

  1. FLAC (Free Legal Advice Centres) is a human rights organisation which exists to promote equal access to justice for all. FLAC is an NGO that relies on a combination of statutory funding, contributions from the legal professions and donations from individuals and grant-making foundations to support its work.
  2. FLAC offers basic legal information through its telephone information line (1890 350 250) and free legal advice through its network of 80 volunteer evening advice centres – more at  It also campaigns on a range of issues including consumer credit, personal debt, fairness in social welfare law, public interest law and civil legal aid.
  3. Our report on legal protections for people using financial services, Redressing the Imbalance, is available to download ( ) as well as an Executive Summary ( In it we recommend, among many other issues, that the Financial Services Ombudsman publish its decisions on an anonymised searchable database.
  4. Charlie Weston of the irish Independent reports the top-up story at
  5. The UCD Geary Institute study by Georges Gloukoviezoff, “Creating Credit, not Debt”  is at,239107,en.html
  6. FLAC’s Guide to Moneylending & the Law is at
  7. The Central Bank study referred to above was issued on 8 November 2014 and is at
  8. The Consumer Credit Act 1995 regulates moneylenders at Part VIII, and the top-up loans area comes under Section 99  - see