Vol. 385 No. 7
asked the Minister for Justice if there are any proposals prepared by his Department in relation to the updating of the law on money-lending; the nature of these proposals; when he will introduce legislation on this subject; and if he will make a statement on the matter.
21.
asked the Minister for Justice if he has considered the report produced by the Combat Poverty Agency on money-lending and low income, which recommended that the Garda should be resourced to carry out an intensive campaign to identify and prosecute unlicensed money-lenders, and that a senior Garda officer should be appointed to oversee the enforcement of these laws; if he intends to act on these recommendations; and if he will make a statement on the matter.
I propose to take Questions Nos. 12 and 21 together. The report produced by the Combat Poverty Agency for the Minister for Social Welfare was considered by the Government recently.
In the light of their consideration of the report the Government have decided to approach the issue of money-lending on two levels — intervention through legal and financial measures and through the provision of advice, information and education on debt and money management. These measures include the initiation by the Minister for Industry and Commerce, in conjunction with the Minister for Justice, of a full review of the present legislation on money-lending and its implementation with a view to countering disreputable practices through improving the regulation and control of money-lending. In that context the Minister for Industry and Commerce will introduce the necessary legislation to implement the EC Directive on Consumer Credit which will encompass money-lending. The Directive is to be implemented by January 1990.
As to the recommendations of the Combat Poverty Agency report concerning the Garda, I am informed by the Garda authorities that the Garda pursue actively all alleged breaches of the law in relation to money-lenders. However, a difficulty nearly always encountered by the Garda in investigating the allegations against money-lenders is that in many cases the persons making the allegations or the borrowers in question are either unable or unwilling to give information. While this is an aspect which I will naturally consider further in the context of the review of the present legislation, it is difficult to envisage any amendment of the law which would have the effect of removing this difficulty fully.
As regards the specific recommendation that a senior Garda officer should be appointed, at both national and regional levels, to oversee the enforcement of the law on money-lending, I consider that it is more appropriate that this should continue to be dealt with by all members of the Garda Síochána as at present, having regard to local circumstances and within the context of overall policing in any any particular area.
In the light of the foregoing, it will be clear that I have serious doubts concerning the implementation of the report's recommendations about the involvement of the Garda generally. It seems to me that in the light of experience and having regard to the essential character of a money-lending transaction — and this is borne out to a great extent in the Combat Poverty Agency report — there is much to be said for dealing with the issue in the context of consumer credit — protection — control as is the case in other countries. Nevertheless we will be looking at this aspect of the matter again in the context of the review of the present legislation.
I thank the Minister for his detailed reply. I note the reference to the EC directive which is proposed to be implemented here by 1990.
By the end of 1989.
Has the Minister for Justice any proposals for legislation to tighten up on the licensing of money-lenders? Is it proposed to allow those who are not immediately involved in the granting of a licence, such as community or charitable interest, to object to or oppose the issue of a licence to a money-lender? Has the Minister for Justice, or the Minister for Industry and Commerce, had regard to the Consumer Credit Act, 1974 in Britain and the usefulness of some of its provisions in proposed legislation here?
The Minister will be considering all these matters in conjunction with the Minister for Industry and Commerce and will take appropriate action. The bulk of action in this area will transfer to Industry and Commerce in line with procedures in other European countries. This legislation is in the early stages of preparation but it must be completed in the course of next year.
I would ask the Minister to impress on the Minister for Justice the need for some mechanism whereby licences issuing can be opposed by those who have a community or charitable interest in an area. Money-lenders, whether they be legal or illegal, often operate in a very small neighbourhood area and the information is local to that area. This is a point which should be considered.
I will convey that to the Minister. Even in the present circumstances it would be open to local community groups or a credit union to make their views known to the Garda, who would bear those views in mind if an application for a licence was received.
Would the Minister not agree that because of the nature of money-lending it is not enough to say that complaints will be investigated? People who are involved with money-lenders may be very reluctant to make complaints for one reason or another, as is well known. The recommendation that a senior Garda officer should be appointed at national and regional levels to oversee the enforcement of the law would be more appropriate and effective.
In tackling the question of money-lending generally information came to light as to the very high interest rates which were being charged, particularly bearing in mind the APR, the true rate of charge in the course of the year. APRs ranged from 210 per cent to 288 per cent. This was one of the major findings of the study. Those who have looked at money-lending otherwise have found charges even higher than 288 per cent. The Government's action plan includes a number of measures, one being the loan guarantee fund. The Lock Credit Union in Cork have taken a major initiative which has been very successful in getting people away from money-lenders. That is probably one of the most practical and immediate things that can be done. Cork also seems to have taken the initiative in regard to complaints. One major case where the borrower was prepared to go the whole way was very successful and the money-lender subsequently got out of business. With regard to small fines, it is a matter of updating the legislation. It is true that there is a natural reluctance to make complaints. In cases which I have discussed with the credit unions there have been threats made. There is no question about that.
Would the Minister explain why a review is taking place now in view of the glaring inadequacies in our money-lending legislation? The Minister indicates that there is not a case for major change in that legislation. Would he not accept that the onus of proof is totally on the debtor while in other countries, including the UK, the onus is on the creditor to disprove allegations of extortionate credit? That is what we should have here. Would he comment on the proposal in the report by the Combat Poverty Agency that money-lending at excessive rates should be made a criminal offence? Why is he not taking that recommendation on board? Would he not accept that the penalties are utterly derisory and are no deterrent to those carrying on illegal money-lending?
The Minister has serious doubts that making it a criminal offence would be a satisfactory solution. However, that matter will be considered in the context of the forthcoming legislation. It is useless to get into argument about why the matter is being dealt with now. Work on the report was undertaken by the Combat Poverty Agency when I asked them to undertake a specific, direct study which would produce fairly immediate answers as a basis for action. That report led to the Government action programme. In any event, preparations are under way under the EC Directive through the Department of Industry and Commerce.
Would the Minister agree that this is a bumper period for these leeches in society and that the people involved exploit the less well off in our community? Are there any proposals to discuss this matter with the commercial banks, who have failed miserably in educating people in particular areas as to the facilities available? They should extend their facilities to people rather than depend constantly on business from different sections of the community. Would the Minister agree that commercial banks have a moral responsibility towards all sections of society and that ways and means should be found through their system to replace these leeches by proper commercial trading?
Yes. Everything the Deputy says is very relevant. This is the time of year when money-lending comes to the fore and the report brought this out. At certain stages in the year, or at certain events in the family cycle, people are in need of money.
In relation to the banks, I approached the Banks Standing Committee of the four major banks and I asked them if they would support the loan guarantee fund and the action we are taking in that area. They considered the matter for about a week and said they would put down pound for pound. As the Deputy knows, the Government made £100,000 available for the loan guarantee fund and the banks said they would also give £100,000. I do not know how much each one allocates but it is probably done on a pro rata basis in relation to their own business. They have also nominated a person for the supervisory committee. I was quite anxious that the banks, as well as the credit unions, would participate. In the past I was familiar with local bank managers helping people out of trouble——
And putting them into more trouble.
——but there is always the occasional defaulter and of course the local bank manager has to answer for that. In the case of the credit union in Cork, out of 114 cases only three defaulted. That gives a good idea of the ratio. The banks will now be able to participate and that will get under way early in the new year. The credit unions will hold a meeting on the matter this weekend. I would hope by next week to be able to go ahead with the setting up of the supervisory committee. The banks are prepared to work with us on this matter and I am delighted with that.
They would do far more if they opened their doors to those with no income.
We have to solve the problem for the people first and the guarantee will help to do that.
The closed doors policy does not help.
