I move that the Bill be now read a Second Time.
The introduction of this Bill was foreshadowed in the Programme of Law Reform published in 1962. The law regulating the trade of pawnbroking is contained basically in two statutes of Grattan's Parliament, and it is remarkable that, apart from some minor amendments, the law has remained untouched by the legislature for so long. The statutes of 1786 and 1788 were, in fact, the first attempt of the Irish legislature to regulate the trade of pawnbroking here. Before 1786 the usury laws then in force made it unlawful to charge more than 6 per cent per annum for the loan of money, however small the loan or great the trouble connected with it. No doubt this made it difficult, if not impracticable, to carry on the trade of pawnbroking for small loans in an open and lawful manner. The Act of 1786 made it lawful for pawnbrokers to charge from twenty five to thirty per cent per annum. This is evidenced in particular by section 17 of the Act, which provided that nothing in the Act "should extend or be construed to extend to any person who should lend money at the rate of six per cent per annum only." Hence any pawnbroker who was satisfied with six per cent—and it must be assumed that even then there were very few—escaped the restrictions of the statute altogether. This is still the law, but the case for repealing it without re-enactment in the present Bill will not, I feel, have to be argued very strongly to the House.
For the purpose of discussing the Bill now before us, I am prompted to assume that most Deputies will not be altogether unfamiliar with the intricacies of pawnbroking practice and procedure and that they will have little difficulty in understanding, for example, some of the peculiar terms used in the trade. I would even hope that some may, indeed, have experienced the excitement of tracing their pawn through the sale book in the hope that its sale might have produced an "overplus". I trust, however, that such Deputies will bear with me if, for the benefit of the less experienced Deputies, I summarise the principles involved in the regulation of the pawnbroking trade by statute.
There are, first of all, two classes of pawning, namely, those that come within the Pawnbroking Acts and those that do not. The Acts apply at present where the loan does not exceed £10, and the pawnee is a pawnbroker within the statutory definition. In all other cases the contract is governed by the general law. However, we are only concerned here with pawning within the scope of the Pawnbroking Acts.
The reasons for regulating smaller pawning transactions by statute may be stated briefly as follows:—
(1) to ensure that the pawner is given a ticket which will readily identify his property:
(2) to vest the right to redeem the pledge in the person producing the ticket:
(3) to enable the pawnbroker to make a specified charge for the ticket and, before releasing the goods on repayment of loan, to demand a maximum scale of interest in lieu of all other charges of handling, storing and insuring the pledge:
(4) to make it lawful for the pawnbroker to realise the sum lent together with the interest due by the sale of the pledge at the end of a specified period if the pledge is not redeemed:
(5) to oblige the pawnbroker to pay to the pawner on demand any surplus, termed overplus in the Acts, which the unredeemed pledge may have produced on sale, after deducting the amount of the loan and all lawful charges due; and
(6) to ensure that the sale of unredeemed pledges is effected through public auction.
The main purpose of the Bill before us is to have the statute law governing pawnbroking restated in a single modern statute. Opportunity is being taken, however, to effect a number of amendments designed chiefly to simplify the law and make it suitable to modern needs. A modest increase in pawnbroking charges is also being provided for to compensate for the substantial increases that have taken place over the years in the cost of conducting a pawnbroking business. I shall deal in more detail in a moment with a number of the more important amendments proposed in the Bill.
It may be held by some that pawnbroking is dying out and that nothing should be done to keep it alive. I do not accept this view. Pawnbrokers have provided a very useful service to the community in the past. It is true that the statistics available reveal a steady decline over recent years in the demand for the services offered by pawnbrokers—a decline which reflects the general improvement in the level of wages and employment and the expansion of credit facilities in other directions. Despite these improvements, however, I believe there will still be room for the special loan facilities provided by pawnbrokers. These facilities can be made all the more efficient and the interests of pawners better protected if the law governing pawnbroking is simplified and brought up to date, as the Bill proposes to do.
The first amendment to which I should like to refer is contained in section 3 of the Bill. As I have said, the existing statute law governs pawning transactions in which the loan does not exceed £10, and this limit has remained unchanged since 1788. Having regard to the changes in money values that have since taken place, the Government consider it desirable that all pawning transactions not exceeding £50 should be brought within the scope of the statute.
Part II of the Bill deals with the licensing of pawnbrokers. The present requirements of the law in regard to licensing are detailed in paragraphs 9, 10 and 11 of the explanatory memorandum. It will be clear to Deputies that many of these requirements have long since become obsolete and that it is desirable to abolish them in favour of more modern procedures. In addition, there is no reason for not applying uniform procedures to the Dublin and provincial pawnbrokers and abolishing the present differentiation. Section 8 of the Bill provides, therefore, that a pawnbroker should be required only to obtain a licence for each premises at which he carries on business. This licence will be renewable annually and will be granted by the Revenue Commissioners on payment of the appropriate duty to be fixed by the Minister for Finance in the Finance Act and on presentation of a certificate of suitability from the District Court for which provision is made in section 10.
In considering the grant or otherwise of a certificate of suitability, it is proposed that the District Court should have regard, amongst other things, to the character of the applicant, the suitability of his premises and the kind of business, if any, in which the applicant is already engaged. A right of appeal to the Circuit Court against refusal by the District Court to grant the certificate of suitability is also being provided.
The changes proposed in licensing procedure will have the effect of abolishing the duty of £92 6s. 2d. which each pawnbroker carrying on business within the Dublin Metropolitan Police District is now obliged to pay each year to the local authority. This duty, which is in addition to the present excise duty of £7 10s. 0d. was originally imposed by a local Act of 1804 which applied the duty to defraying the charges of preserving the peace within the city of Dublin. There can be no case for continuing the payment of this duty to the local authority. Indeed it is noteworthy that its abolition was recommended as far back as 1868 in the report of a Commission of Inquiry into the pawnbroking laws. The loss of revenue to the local authorities will not be significant, £1,200 in the case of the Dublin Corporation and £92 6s. 2d. in the case of the Corporation of Dun Laoghaire.
The Government's proposals regarding pawnbroking charges are contained in Section 20 of and the Fifth Schedule to the Bill. They are discussed in relation to the existing lawful charges in detail in paragraph 25 of the Explanatory Memorandum. The Government have accepted the representations of the Irish Pawnbrokers' Association that the present lawful charges, which have remained unchanged since 1825, are now inadequate and should be increased to provide some compensation for the substantial increases that have since taken place in the costs of conducting a pawnbroking business.
In Northern Ireland rates of interest were increased in 1954. Up to then they had been identical with the rates allowed here. In the case of Britain, a slight increase was allowed in 1922 on the old 1872 rates. A further increase in British charges was granted in an Act of 1960, which, although reverting to pre-1922 interest rates, provided for the first time for a "valuation" charge of 2d. per five shillings, limited, however, to loans of £5 or under. Having considered the merits of raising the interest rates, as was done in Northern Ireland or of following the method adopted in Britain in 1960, the Government came to the conclusion that the introduction here of a "valuation" or "service" fee, would be the most appropriate method of meeting the higher costs of conducting pawnbroking business. A new fee, described as a valuation fee, of 2d. on each five shillings or part of five shillings of a loan is, therefore, being provided for in Part III of the Fifth Schedule. The fee will be chargeable only on loans not exceeding £10. In the case of loans over £10, special contracts will be allowed, which I shall deal with separately later on.
The proposals in regard to certain other lawful charges provide some modification of the present charges in favour of the pawner. The supplementary interest fee of ½d. on loans not exceeding 18/- is being abolished. At this point, I must apologise if Deputies have been misled by the information given in the explanatory memorandum concerning this particular fee. The fee chargeable is in fact a halfpenny for a loan of any amount not exceeding 18/- and not a halfpenny for each 2/- of such loan, as is stated in paragraph 25 (1) (b) of the memorandum. A standard charge of 2d. is being provided for pawn-tickets, and this will replace the existing charge of 1d. to 4d., according to the amount of the loan. The formula for the calculation of interest in respect of loan periods of less than a month after the first month is also being modified in favour of the pawner.
The proposals in the Bill will also amend the existing redemption period, that is to say, the period during which pledges remain redeemable and may not be disposed of by a pawnbroker. At present the period runs from six months to 12 months, according to the amount of the loan. The Government have accepted the representations of the Irish Pawnbrokers' Association that the present redemption period is too long and operates in many cases to the detriment of both the pawner and the pawnbroker. Since 1960, pawnbrokers in Britain are not required to keep pledges longer than six months. The proposal in section 21 of the Bill represents a compromise between the British provision and our existing law. While the redemption period is being reduced to six months generally, provision is being made for an extension not exceeding a further period of six months if interest due is paid within the original redemption period. Moreover, the more valuable pledges, that is to say, articles of gold, silver etc., are provided for specially and must be retained by the pawnbroker for a period of 12 months.
I now come to the question of the disposal of unredeemed pledges, in other words, pledges remaining unredeemed at the end of the redemption period. As I stated earlier, the law requires that all unredeemed pledges be sold by public auction. However, this is not being observed outside the Dublin area, for the reasons stated in paragraph 35 of the explanatory memorandum, which also sets out the obsolete nature of some of the provisions now governing the disposal of unredeemed pledges.
In Northern Ireland, the law was amended in 1954 and in effect unredeemed pledges now become the pawnbrokers' own property and may be disposed of as they think fit. In Britain, unredeemed pledges pawned for £2 or less become the pawnbroker's own property; but all other pledges must be sold by public auction, though pawnbrokers are free to select any auctioneer for this purpose.
It is considered that the pawners' interests would best be served by continuing the general requirement of having unredeemed pledges sold by auction through auctioneers specially nominated for the purpose by the Minister for Justice and this is proposed in Sections 29 and 30 of the Bill. However, in order to provide some relief to pawnbrokers from the rigorous requirements of the present law, at least in the case of the less important transactions, Section 29 includes a provision on the lines of the British provision excluding pledges pawned for £2 or under from the general requirement of sale by public auction. The relief will not, however, extend to pledges of gold, silver, etc., pawned for £2 or under, which will continue to be disposed of by public auction.
Section 15 of the Bill is an entirely new provision and meets very strong representations made by the Irish Pawnbrokers' Association that pawnbrokers here be allowed to enter into special contracts as they are in Britain. In Britain, the law allows a pawnbroker to make a special contract with a pawner where the loan exceeds £5, but he must deliver to the pawner a special pawn-ticket specifying the terms of the contract, a duplicate of which must be signed by the pawner at the same time. A special contract is within the provisions of the Pawnbrokers Acts, except in so far as the provisions are excluded by the terms of the special contract itself. The need for special contract arises, in the main, where large or very valuable articles are offered in pawn, such as furniture, cars, etc., involving special storing and insurance arrangements, which in turn warrant special terms. While the Association's representations have been accepted it is proposed that the provision for special contract will operate only where the loan exceeds £10.
These are the more important amendments proposed in the Bill and I hope that what I have said gives the House a fair outline of the scope of the measure. I also hope that the marginal notes inserted on the Bill itself and the detailed Explanatory Memorandum will be of assistance to Deputies. The Bill has been discussed with the Irish Pawnbrokers' Association and a number of minor amendments will be introduced at Committee Stage to meet representations made.
I commend the Bill to the House and ask that it be given a Second Reading.