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Maximum interest rates
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9. The Act of 1995 is amended by the insertion of the following section after section 98:
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“98A. (1) A high cost credit provider shall not charge interest, under a high cost credit agreement, at a rate which exceeds a maximum rate of interest—
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(a) prescribed under this section, and
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(b) applicable to the agreement.
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(2) The Minister shall prescribe the following:
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(a) in respect of a loan (other than a running account) under a high cost credit agreement—
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(i) the maximum rate of simple interest chargeable per week (being a rate less than or equal to one per cent), and
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(ii) the maximum rate of simple interest chargeable per year (being a rate less than or equal to 48 per cent);
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(b) in respect of a running account under a high cost credit agreement, the maximum rate of nominal monthly interest chargeable on an outstanding balance (being a rate less than or equal to 2.83 per cent).
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(3) A maximum rate of interest prescribed under this section shall apply to a high cost credit agreement entered into—
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(a) after the date on which the regulations, by which the rate is prescribed, come into operation, and
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(b) on or before the date, if any, on which the regulations next made under this section come into operation.
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(4) The Minister shall consult with the Bank before making regulations under this section.
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(5) The Minister shall have regard to the following when making regulations under this section:
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(a) the impact of the regulations on competition in the high cost credit sector;
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(b) the impact of the regulations on the supply of credit in the high cost credit sector;
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(c) the average rates of interest offered to customers in the high cost credit sector and any trends in such interest rates;
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(d) where setting the proposed rate would reduce the supply of credit in the high cost credit sector, the impact of such a reduction on financial inclusion.
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(6) In subsection (5)(d), ‘financial inclusion’ means affordable, timely and adequate access to a range of regulated financial products and services by all segments of society.
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(7) The Bank shall, when consulted in accordance with subsection (4), prepare a report assessing the possible effects, on the matters referred to in subsection (5), of the rates proposed to be prescribed by the Minister.
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(8) The Bank shall, within 3 years of the coming into operation of the Consumer Credit (Amendment) Act 2022, prepare a report assessing the impact of the rates of interest prescribed under this section on the matters referred to in subsection (5).”.
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