This article is from page 20 of the 2013-04-02 edition of The Clare People. OCR mistakes are to be expected so download the original SWF or the rendered page 20 JPG
THE manager of the St Francis Credit Union in Ennis has warned that financial pressures are driving people into the arms of moneylenders.
Louie Fay says people are being “pushed to extremes” and forced to pay exorbitant borrowing rates.
Mr Fay was speaking last month at a seminar hosted by Citizens Information Centre and Alliance of Social Protection of Recipients.
The event at the Temple Gate hotel highlighted the impact debt is having on Clare households.
Mr Fay said, “For me the push is to push people towards moneylenders. I use the word legal but I would use it with a question mark because I don’t believe there is such a thing as a legal moneylender. For example, € 500 over six months, a person will pay € 150 interest. Whereas if they go up to the Credit Union they pay € 15 interest. And that’s what happening. MABS will verify this. People are being pushed out to extremes.”
He also critcised the lending practices of some banks. Mr Fay said, “I had somebody come in to me lately. This lady had a job and wasn’t earning big money. She was saving € 500 a month. When I looked at her pay packet, I asked her how she could save € 500 a month. She said, “What I do is, I save first and then I live.” I thought that’s pretty serious. She had been saving € 500 for 60 months. That works out at € 30,000 saved over five-year period. She needed to get some work done on her house that was going to cost € 55,000. She went to the bank and said I need to borrow € 25,000 on top of my € 30,000. They took the application. She nev- er thought about this idea that she would be refused. It never crossed her mind. When she went back to pick up the money, she found that the bank had approved € 5,000.” He continued, “I thought about it afterwards, the bank didn’t refuse the loan. They offered her € 5,000. So in the stats that the banks are throwing at us saying they are lending, that (situation) did not come under refusal, it came under the customer not taking the money.” Mr Fay told the seminar that tough new regulations and the consolidation of smaller credit unions would have a big impact on the sector. The meeting heard that lending at St Francis Credit Union has fallen from € 20.3m in 2008 to € 11.8m in 2012. He said, “2013 is probably going to be worse than that. The issue is demand for lending has dropped. People have lost confidence. People are not confident about their jobs, they are not secure in doing what they want to do. Mr Fay said credit unions also had to shoulder some of the burden for fueling a lending market that caused the economy to crash. He said, “We’ve got to put up our hands because we were part of the problem, as credit unions we were part of the problem. We bought into some of that bad lending. Some credit unions did, some credit unions didn’t. We need to learn from what has happened in the last five years.”