Denise Delaney

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Denise Delaney Consumer Information 7 March 2008
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What is the Financial Regulators role and
remit?
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Financial Regulator

• Established 1 May 2003
• Independent watchdog.
• Responsible for the regulation of all financial
  services firms in Ireland.
• Almost 13,000 financial services providers and
  collective investment schemes.

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Our Main Tasks

• To help consumers make informed financial
  decisions in a safe and fair market and
• To foster sound, growing and solvent financial
  institutions which give consumers confidence that
  their deposits and investments are secure.

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Consumer Protection Code

• Consumer Protection Code introduced on 25 July
  2006 - set of standards and rules that financial
  services firms must follow when providing a
  financial product or service, or giving financial
  advice.
• Copy available on www.financialregulator.ie

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Consumer Information - ITS YOUR MONEY
Initiative

• Independent information in plain English to help
  you, the consumer, to shop around for best value
  most suitable product.
• Consumer Helpline - Mon-Fri 8-8
  1890 77 77 77
• Information Centre, 6-8 College Green, Dublin 2
  Mon Fri 9.30-5
• www.itsyourmoney.ie - consumer website
• consumerinfo_at_financialregulator.ie
• Consumer publications

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Different types of lending products

• Short Term Debts payable within 1 year
• Overdrafts
• Credit cards
• Loans from moneylenders
• Medium Term Debts payable 1-5 years
• Personal Loans
• Hire Purchase
• Credit Union Loans
• Long Term Debts payable over 10-40 years
• Mortgages.

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Your credit rating

• This is a record of your borrowing past and
  present.
• Lenders send info. on your debts to the Irish
  Credit Bureau.
• Info. stays on the record for 5 years after the
  account has been closed.
• Report available from www.icb.ie or 01 2600388
  for 6.00.

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Overdrafts

• Your bank allows you to spend more money than you
  have in your account up to a certain amount.
• Available to current account holders.
• Interest charged on the amount you are overdrawn.
• Account must go into credit for at least 30 days
  in the year.
• May affect your free transaction fee status.
• See our Personal Current Account online survey
  for up to date Overdraft Rates.

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Sample of rates charged on authorised overdrafts
from Personal Current Account Online Survey _at_
26/2/08

• AIB 15.91
• BOI 15.2
• Halifax 9.43
• NIB (Easy) 10.1
• NIB (Easy Plus) 9.75
• PTSB 13.1
• Ulster Bank 11.55

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Credit Cards

• Credit card company lends you money which you
  spend through purchases or cash withdrawals.
• Interest charged and interest free period differs
  for purchases and cash withdrawals.
• Must make minimum repayment each month.
• Stamp duty of 30 payable annually in arrears.
• No direct debits on credit cards recurring
  debits.
• Your limit cannot be increased unless you request
  it.

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Sample of rates from Credit Card Online Survey _at_
26/2/08

• Lowest Rate for Purchases 9.4
• Highest Rate for Purchases 19.1
• Lowest for Cash Advances 9.4
• Highest for Cash Advances 20.7
• 19 cards listed on our survey

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Moneylenders

• Moneylender must be licensed.
• Typically small loans but can be larger.
• APR is at least 23 - can be much higher.
• Can be door to door moneylenders, or companies,
  e.g. mail order companies.
• Cannot charge extra interest or charges, e.g. if
  you miss payments.
• List of moneylenders available on
  www.financialregulator.ie.

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Personal Loans

• Borrow between 1,000-50,000 for a set period.
  Normally up to 5 years but in some cases up to 8
  years.
• Variable or fixed rates available.
• Monthly repayments.
• Compare loans using APR.
• Normally unsecured. But lender can request
  security, e.g. for student loans.
• Arrangement or set up fee, security fee, penalty
  fees.
• Unsolicited pre-approved credit is prohibited.

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Sample of rates from Personal Loan Online Survey
_at_ 26/2/08Fixed Rates

• 13,000 over 3 year lowest Fixed Rate
• 6.9 APR
• 399.79 per month
• Total repaid 14,392.44

• 13,000 over 3 year highest Fixed Rate
• 10.8 APR
• 418.87 per month
• Total repaid 15,154.32

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Sample of rates from Personal Loan Online Survey
_at_ 26/2/08 Variable Rates

• 13,000 over 3 year lowest Var. Rate
• 8.4 APR
• 407.97 per month
• Total repaid 14,686.92

• 13,000 over 3 year highest Var. Rate
• 13.25 APR
• 434.99 per month
• Total repaid 15,659.46

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Credit Union Loans

• Must be a member of the CU.
• To be a member you must fall within the common
  bond, i.e. live or work in the same area or for
  same employer.
• Must have the no. of shares required by the CU to
  qualify for a loan.
• Weekly, fortnightly or monthly repayments.
• No fees.
• Interest rebates CU may refund some interest
  paid by members each year.

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Hire Purchase

• Normally offered by shops, garages and some
  lenders as car finance.
• Repaid over fixed term.
• Lender owns the goods until the debt is repaid.
  Therefore goods can be repossessed and you cannot
  sell them without owners consent.
• APR not stated on HP agreement.
• Hire purchase price cost of goods interest
  fees.

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Example car price 13,300, 5 year HP agreement

• Cash Price 13,300
• Less deposit/trade-in 400
• Amount for finance 12,900
• Plus interest 3,972.60
• Plus fees (doc comp. Fee) 126.90
• Hire Purchase Price 17,399.50

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Hire Purchase

• To end agreement you must pay half the HP price
  less payments made to date and return the goods.
• You can repay all the HP price early and own the
  goods.
• Goods can be repossessed. Less than 1/3 paid no
  legal action required to repossess.
• If you take the car abroad, you are required to
  notify the owner (lender) before doing so.
• Check if a car has outstanding HP debt Hire
  Purchase Information Ltd 01-2600905

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Example to give back car in month 25

• Half HP Price 8,699.75
• Less 25 payments 6,915
• Less deposit 400
• Less fees paid 63.45
• Amount due 1,321.30
• Difference between what was paid and half the HP
  price.

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Example to buy car in month 25

• HP price 17,399.50
• Less 25 payments 6,915
• Less deposit 400
• Less fees paid 63.45
• Still owes 10,021.05
• Plus completion fee 63.45
• Less interest rebate 746.14
• Total to be paid 9,338.36

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Payment protection insurance (PPI)

• This is an optional add-on to a loan or credit
  card.
• No charge for life cover with credit union loans.
• May provide cover if you
• die,
• are permanently disabled
• are made redundant.

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What is not covered under PPI?

• Only specified illnesses are covered. Stress or
  back injury may not be covered.
• Part-time, self-employed or workers in a family
  business are exempt from redundancy claims.
• You cannot claim for redundancy in first 3-6
  months of policy.

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Do you need PPI?

• Do you pay your Credit Card balance off every
  month?
• Are you in part-time or contract work?
• Are you self-employed?
• Will you be paid by your employer if you are on
  long-term sick leave?
• Are you in a job that is secure from redundancy?
• Do you already have these type of policies?

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Repaying debts early

• Do a list of all outstanding debts you have,
  include
• Mortgage,
• All loans - car, bank and credit union,
• Overdraft,
• Credit cards store cards,
• Moneylender loans, incl. catalogue debt,
• Hire purchase.

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Repaying debts early

• Ask your lender for the following information
• How long is left on the debt?
• What interest rate are you paying(APR)?
• How much would it cost to repay the debt now?
• How much interest will you save if you repay the
  debt now?
• Will you pay any penalties for repaying early?

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Repaying debts early

• Use the answers that you get to decide which debt
  you should repay first.
• You can compare the return on your deposits to
  the savings you would make by repaying your
  debts.

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Consumer Contact Detailswww.itsyourmoney.ieCo
nsumer Helpline 1890 77 77 77consumerinfo_at_ifsra.i
eInformation Centre, 6/8 College Green, Dublin
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Thank you

• Any questions?