IFA Farm Business Chairman Martin Stapleton has said there is an urgent need to address excessively high interest rates for farm enterprises and other small businesses.
Mr Stapleton’s made his comments ahead of a Dail debate this evening on variable rate mortgages. The Bill proposes to give powers to the Central Bank to set a maximum interest rate if there is a failure in competition in the market.
“The lack of competition in the Irish banking sector has led to interest rates far in excess of other EU countries. As an export dependent sector, farming and the agri-food sector is particularly affected by this. It places our farmers at a competitive disadvantage.”
He continued, “The proposed legislation correctly identifies some of the major issues in the Irish banking sector, which are common to the home mortgage sector and to farmers and SMEs. These include an overall lack of competition in the sector, and the difficulties faced by customers in switching providers. This is a particular issue for farmers, as the costs of changing banks and of registering a legal charge for secured borrowing are so high that it reduces the value of a more attractive interest rate”.
Mr Stapleton concluded, “The Government must take seriously the need to tackle excessively high interest rates on farm customers and small businesses.
• Consideration of extending powers to the Central Bank to give direction on interest rates for farmer and SME lending;
• Increasing competition in the banking sector through the work of the SBCI, providing alternative and additional funding; and
• Reducing the costs of registering a legal charge for secured borrowing, thereby allowing customers to move financial institutions at a lower cost.