I welcome this measure and hope it will succeed. In essence, it is about putting in place some form of protective system to ensure that the most vulnerable people in our society are not misled and exploited. Many of us have many examples, indeed, of that kind of abuse. Unfortunately, one of the aspects of our economic problems is precisely that, that there is an enormous number of people now who are extremely hard pressed who find themselves having to live from hand to mouth or on borrowed money. There is, therefore, fertile ground for those who want to abuse that opportunity for their own greedy needs. It is right, even if it late in the day, for us to respond as well as possible to that unfortunate threat.
The order is the minimal step we should take and I wonder whether we should go further in a number of respects. The purpose of this, essentially, is to lay before people the full facts relating to the true cost of borrowed money. If that is the case, then we must ensure that the order will be effective because it is, without any question of doubt, absolutely accurate to say that there are thousands of people at present who are in hock to financial institutions of one kind or another or to moneylenders of one kind or another and who do not fully appreciate the extent of the financial noose around their necks. They find themselves unable to extricate themselves from that predicament. Trying as they are, desperately in some cases, to raise the money to pay the ongoing instalments, they find themselves running very hard to stay precisely where they are. At the end of the day they still continue to owe a great amount.
I have met many people who after years of paying instalments which came to a multiple of the capital sum borrowed still found that they allegedly owed money in excess of the initial capital sum borrowed. Worse than that, they could not get any form of assistance, advice or access to information or to counsel which would give them some opportunity of dealing with some of the conglomerates involved here who, when it comes to the crunch, sometimes deal with people extremely heartlessly.
I wish there would be at some stage a discussion in this House on that whole area of money and its use, personal borrowings and the interest rates arising therefrom. It is not just those on the fringes of the financial markets and institutions about whom we are talking. We are talking about some of the respected names in that business, including the credit card companies, the banks and the moneylending agencies and others, many of whom have true interest rates which are extremely excessive and very hard to justify but justification is not called for because most people are not aware of it.
I do not want to delay the discussion this morning so I shall not go into this matter in the form of copious examples, but there are many one could give. Certainly, I can say sincerely and truthfully that my constituency is one of those that has suffered and is suffering the ravages of this kind of financial exploitation. I welcome the order and hope it will be effective. If some of us had our way, we might go a little further in trying to ensure that the scales are a little more balanced when it comes to dealing with some of the more rapacious elements in the business of lending money without any concern for the social consequences, the consequences on family life or other consequences. Basically, they keep those people on tap for years and milk them until they are virtually dry. At the end of the day they come down hard on them, if necessary. Unquestionably there is a need for this House and the Government to take sides in this unequal contest and I know which side we should take, obviously the side of the person who is open to that form of abuse and exploitation.
One of the suggestions that I would like to make is this. The order seems to be framed in regard to written, stated and printed advertisements. That is the phraseology used in the order itself and that is the proposal that is made. What about those advertisements or statements which are directed by means of radio or television or advertisements which are not advertisements as we know them traditionally but which essentially are making ploys and which might be open to argument as to whether they were advertisements? I seek clarification on that point because the spirit of this order is that wherever there is a communication about rates of interest the true cost should be brought home to the person who is about to embark on the borrowing of the money. Bear in mind, that in every case the person about to engage in the contract is a person who needs the money for some reason or other. They, obviously, do not have the money because if they had they would not be borrowing it. In other words, they are vulnerable and open to being seduced and sweet talked into going beyond what is right and suitable for them, although in some cases at present it is unquestionably out of necessity to keep a roof over a person's head or to keep food on the table so I can sympathise with them.
The order refers to the statement in the advertisement being given a certain kind of prominence. Paragraph 6 (2) refers to an advertisement displayed at a premises which refers directly or indirectly to the availability of credit. That is the general thrust. In view of the fact that we are likely to have a fair number of radio stations and other television stations perhaps in due course, I would like to know how we are going to deal with the challenge presented by a comprehensive range of, if I may call them, audio-visual advertisements and marketing ploys. In that context I am talking about information booklets which would not be advertisements per se but which undoubtedly in some cases would be more effective as selling aids. For example, some of the more seductive advertising by the banks is in the area of student loans but this would not come under the heading of advertising. The spirit of this order is, as I have said, to get across the true rate of interest in all cases. Therefore, if necessary I would like the order to be amended or extended to apply to all of these communication exchanges in whatever form or guise they take.
The order does not make adequate reference not just to the need for stating the true rate of interest but to ensuring that it is stated in such a way that it is either intelligible or visible. Reference is made in the order to the prominence which is appropriate. Nevertheless, I can visualise that one could have a display board in the corner of an office which gives a certain kind of prominence to the figures involved but where the overwhelming burden of the advertising thrust of the financial institution involved is such as to present that information in the small print. I would like to see the Minister making a serious assault on the fine print mentality, the over-riding purpose of which is to hide from the consumer the true effects and the full consequences of contracts and obligations entered into. Some of this fine print, without doubt, mitigates against the rights of a citizen and damages their capacity to act in law against those who might very well be engaged in this business.
I am troubled by the possibility, for example, that the minimal terms of the order could be met by a display notice put in some obscure corner of an office, perhaps behind a grill, where a person will not be able to see it and that other advertising forms would present the bald figures of the attractive net rate of interest without making any reference to the true cost of the credit involved. I am not sure whether the order is adequate in that respect although I sympathise with those who drafted it. The tables outlined at the back of the order involve all kinds of formulae. They are like a third level examination in mathematics. The point which needs to be borne in mind is that there is no point in making this order unless it is going to be effective and it gets across the information to the public. Let us see if we can abolish so far as possible the fine print which seeks to hide the full facts from people.
I often wonder whether there should be some form of temporary stay in the signing of contracts such as this. I am aware of cases where people were suddenly startled, even traumatised in some cases, by excessive demands made by corporate bodies. Indeed, this very week I heard of a case involving an elderly couple who repeatedly received extortion demands from the Revenue Commissioners which, as I was able to ascertain in an answer to a question I put in this House, were unjustified. There was not even an apology offered in that case. The point I am trying to make is that there are people who react in those circumstances by immediately going to some money-lending institution and perhaps in a semi-emotional way getting involved in obligations which are not capable of being met.
In this order there should be some provision for a breathing space between the initial contractual undertaking and the completion of that contract, even if it is only for a few days, to ensure that people would have a chance to think through the consequences armed as they should then be with all the facts in regard to the true rate of interest. Here again, I am troubled by the vulnerability of people who may suddenly find themselves as a party to a contract which in retrospect they would not have entered into had they had a chance to think in a non-emotional atmosphere outside of the environment in which people often borrow money.
I submit that under section 51 of the Sale of Goods and Supply of Services Act, 1980 that possibility does exist. I would like the Minister to comment on that aspect. The Minister said in his remarks that the order will not apply to free credit or the licensed banks at present because they are exempt from the provisions of the Consumer Information Act, 1978 under which this order is being made. Admittedly, the banks generally use the APR system and I am told that with the co-operation of the Central Bank they may continue to do so. However, in principle, I wonder whether it is right that there should be any exemption from one area of moneylending as opposed to any other. I am not sure whether it is justified merely by virtue of the practice which has been drawn up or by the convention which exists involving the Central Bank.
I was interested to note that the Consumers Association of Ireland for whose work we all owe a debt made that similar point. They are unconvinced that the banks should be exempt under the order. In a submission they made to the Minister's Department two years ago they said that the exemption from the Consumer Information Act of banks and finance houses licensed by the Central Bank should be deleted so that the requirements of the new order will apply to these institutions. The association did not agree that the Central Bank had been operating effectively in this area. The association said, "consider, for example, the undesirable wooing of students and others to the banking system and the practice of relegating information regarding the true rate of interest to small print notices in out of the way corners in most bank premises". I have much sympathy with the central point they are making, that the same standards should apply right across the board.
In the near future the building societies will be involved in banking practices and this will undoubtedly heat up the competitive environment in which banks and building societies operate. It will undoubtedly drive marketing managers to tear out more of their hair and get down to seeing how they can sell harder and bigger to anyone who wants to talk to them. The protective device of this order could and perhaps should be available to all people who borrow money, not merely those to whom the order is proposed to apply. Therefore, I ask the Minister to consider this exemption and see whether it is justified, particularly in view of the likely changes in the atmosphere and the competitive environment affecting the banks in the near future.
I do not know why this order should have to come before this House, and I made this point last week on a similar order. Again, it is an area of operational management which the Minister should be able to pursue without reference to having a debate here. If one of the parties involved wants to put down a Private Members' Motion or make an issue of it, fair and well. This order has the agreement of, I would say, everyone in the House. Yet, because it has not managed to squeeze into the Order Paper it has effectively been non-effective in some cases for over two years even though it was drafted initially in the term of the previous Government.
I wonder whether we need urgently some form of system here to make sure that Ministers can get on with their day-to-day job, introduce orders as they see fit and make the changes in respect of which they have a mandate so that this House can be reserved for significant legislative discussions which is what it should be about. If the Minister wants to make a change in this order in six months' time, I presume we will have to come back here. That is preposterous. I question the wisdom of using Dáil time in this way. As things stand, the Minister has to come in here and because of the way business is ordered this order, which in many respects is more significant for many of my constituents than much of the business we spent time on this week — though I do not deny that was very important — has been simply lying there. In the meantime people for whom I am responsible as a public representative have become embroiled in situations which this order might have helped them to avoid.
No number of orders we introduce here can protect people from the potential for exploitation which exists. This point is appropriate not necessarily to this Minister but in the general context. The fundamental way of arming people to ensure they do not become involved in the kind of entrapment we are talking about is through the educational process. Will the Minister consider having a chat with his ministerial colleague in Education in the context that probably there could not be a more important issue in the educational curriculum than information on the proper use of money be it in relation to savings, borrowings, house mortgage, insurance or any other area which most students have to face a very few years after they leave school? This measure is trying to deal with elements of abuse, but the fundamental way of dealing with it would be to ensure that people are armed by educational awareness to distance themselves from people who are in the business of abusing them financially. It is sad we do not do more in that respect. That is the kind of basic attack we should make to ensure that people by their own choice, using their own judgment, can make conscious, rational decisions and have the proper basic attitudes in respect of this area.
The reality is quite the opposite. I have often been startled by young people who get married after leaving school and have no idea regarding borrowing or the cost of money to buy furniture for a house or whatever. They may be aware of the root of a Latin verb but they find that they cannot cope with the real things of life and the real pressures on them because we have all failed to inculcate that awareness in them. However, I hope the order is successful.