Vol. 407 No. 7
9 Mr. Connaughton asked the Minister for Social Welfare if his attention has been drawn to the widespread activities of moneylenders in rural areas; if his attention has further been drawn to the fact that many families on low incomes are placed in an almost impossible position because of moneylenders; and if he will outline the result of the special measures taken by his Department and St. Vincent de Paul in 1988 to pay off moneylenders.
26 Proinsias De Rossa asked the Minister for Social Welfare if he will outline, up to the latest date for which figures are available, the total number of families who have availed of the State assisted scheme to help those in the clutches of moneylenders; the total paid out in loans so far; the average amount of the loan paid; if he has any plans for the greater promotion of the scheme, especially in view of the evidence of a continuing high level of moneylending; and if he will make a statement on the matter.
I propose to take Questions Nos. 9 and 26 together.
In 1987 my concern at the activities of unscrupulous moneylenders, in all parts of the country, prompted me to arrange for the Combat Poverty Agency to undertake a detailed study of this problem. In the light of the agency's findings the Government published an action plan to deal with the issues highlighted in their report. A central aspect of that plan provided for the establishment of a revolving loan guarantee fund which could be used to assist those who found themselves in debt to moneylenders. Proposals for the operation of this fund were presented to me in November 1989 by a supervisory committee which I established to examine how best the fund could be employed.
The aim of the loan guarantee fund, which is administered on a day-to-day basis by the Society of St. Vincent de Paul in co-operation with the credit union movement, is to break the client's reliance on expensive credit and to help families to escape from a self-perpetuating cycle of high-cost debt by introducing them to acceptable sources of low-interest credit. More than 650 families have been assisted to date. Over 350 families have been assisted under the loan guarantee fund. Some £220,000 has already been drawn down from the fund with the average loan being between £1,000 and £1,500. The Society of St. Vincent de Paul have also assisted a further 300 other families to overcome debt problems by arranging credit union loans for them. In addition hundreds of families have received advice on debt and money management. Over 11,000 families have also benefited from the home management and personal development courses which has been financially supported by my Department.
A review of the loan guarantee fund will be undertaken shortly within my Department in consultation with the Society of St. Vincent de Paul and the credit union movement. Any changes necessary to improve the effectiveness of the operation of the fund will be made in the light of this review.
Is the Minister aware of the great numbers of moneylenders, many of them legal, now operating even in the smallest rural towns? Heretofore we had understood that this problem was associated with large centres of population. This has now come down to very small rural villages and provincial towns. Is the Minister happy with the results to date of his endeavours to put a stop to this? Would he tell the House what he thinks of moneylenders who charge exorbitant rates of interest — up to 39 per cent — on loans for such items as Confirmation and First Communion outfits? As I said, I am referring here to legal moneylenders, but is he aware that those moneylenders——
I was hoping for brevity for the reasons I outlined earlier.
This is a very serious problem. Is the Minister aware of the hardship being caused for many families as a result of moneylenders' activities?
I appreciate the difficulties people around the country have with moneylenders. I wish to inform the House that a fund is now in operation in Dublin, Waterford, Tipperary, Galway, Cork, Laois, Limerick, Cavan, Kildare, Mullingar and Kerry — in those areas where the Society of St. Vincent de Paul and the credit unions are working. The society have asked me not to push them too quickly as a substantial number of demands will be made.
With regard to the rate of interest mentioned by the Deputy, 39 per cent, that is a matter for the Minister for Industry and Commerce and the Minister for Justice. The Minister for Industry and Commerce recently pointed out that legislation will be introduced to allow us comply with the EC Directive on consumer credit. Preparation of that legislation is well under way. The question of a 39 per cent limit will have to be addressed in that legislation.
A brief and final question from the Deputy.
I am sure the Minister would agree that no source of credit should cost 39 per cent. Would the Minister outline to the House the way in which information is passed from his Department to those who are caught in this vicious trap? Who in the Department gives this advice?
There is a section in the Department which deals with the health boards with regard to the supplementary welfare allowance scheme. They deal with this matter on a regular basis.
Are they aware that this is happening?
They are. They are in close contact with the Society of St. Vincent de Paul. Despite what some people may think it is not easy to find a remedy for this problem which as the Deputy is aware, is a difficult one. Approximately 1,000 families have been helped directly as distinct from the number of families who have been helped in a general way. Money advice centres have been set up in a number of areas. The system of support and assistance is being developed but we should not mislead ourselves into thinking that this problem can be resolved overnight. If we study the reasons people borrow we will find that in many cases there is a deep tradition of borrowing——
The problem is getting worse.
——and we have got to try to break this.
It is getting worse.
Not for these people.
