Labour MEP for Munster Phil Prendergast has that; “Misleading payday or short-term loan offers, which are aggressively marketed through new media, often targeting vulnerable families, must be reigned in”.
Ms. Prendergast led Labour’s European Parliament group on Parliament’s assessment of the implementation of Consumer Credit Directive, which came into effect in Ireland in June 2010. The assessment was voted through on Tuesday.
Ms. Prendergast said: “People are increasingly taking out loans online or even through short SMS texts on their mobile phones. This is often the case for cash-strapped families taking out payday loans to make ends meet.
“I am particularly concerned with those, as the Directive does not require Member States to extend its consumer protection provisions to loans under €200.
“I have amended this report to urge Member States to extend the scope of application of the national implementing laws to all of those loans, in the interest of protecting the increasing number of consumers availing of them.
“The European Commission must ensure that the Consumer Credit Directive is correctly transposed by Member States, and these in turn must offer full protection to all consumers.
“Consumers have a right to definite information on borrowing rates and charges incurred that is provided in an intelligible manner, even if they have a low value or short-term maturity.
“The information provided online by financial institutions, on consumer loans, has been found wanting by an investigation carried out by the Commission. 46% of the websites checked, lacked mandatory information and one out of five websites presented misleading information on the overall cost of credit.
“Meanwhile, and especially in the run up to Christmas, I caution people to remain alert, as many of these innovative services advertise misleading interest rates and fees to lure those in need of an advance and who may believe that there are low risks involved with low-value or short term loans.
“We also need to make sure that people can easily avail of their right of withdrawal when they are in a financial position to do so, without facing prohibitive costs that play to the benefit of lenders’ profits.”