Vol. 426 No. 3
6 Ms McManus asked the Minister for Enterprise and Employment the reason for the delay in implementing EC Council Directive 87/192/EC on Consumer Credit, particularly with a view to dealing with abuses connected with moneylending; and if she will make a statement on the matter.
Directive 87/102/EC was due to be implemented by EC member states by 1 January 1990. However, it was amended in a number of significant respects by Directive 90/88/EC which was to be implemented by 31 December 1992. Its preparation has necessitated considerable research and widespread consultation with a large number of bodies, institutions and individuals. The option of implementing these measures by way of an Act of the Oireachtas rather than by way of regulations has unavoidably contributed to the delay. The Consumer Credit Bill will constitute a major legislative measure.
I am pleased to say that the Bill contains a series of provisions to tackle in particular the problems of excessive loan charges and unlicensed moneylending.
The Bill will introduce a body of reforms which go beyond the strict requirements of the Directive, will consolidate existing consumer credit law in one unified Bill and will address in an innovative and effective way problems associated with moneylending.
It is envisaged that the maximum penalties for unlicensed moneylending will be increased to £50,000 and/or five years imprisonment.
I have been consulting with the interested groups such as the Society of St. Vincent de Paul, the Consumer Credit Association and the Consumer Association of Ireland. I hope to bring forward this legislation within a matter of months.
I thank the Minister for her reply. Is she aware that no less a person than the Taoiseach told the House on 7 April, 1987 that he was rushing through legislation to deal with this phenomenon of moneylending? As a result of the social welfare cuts — known as the dirty dozen — constituents of mine had their electricity supply cut off and are being driven into the clutches of moneylenders as they are unable to discharge their bills? In the light of that, does she not consider that this matter is urgent and ought not be dealt with in the way promised in this House in April 1987?
I am not aware that this was promised in 1987 but, even if it were, EC Directives of a later date mean that the legislation we are able to introduce will be of a more comprehensive nature. I am sure that will be welcomed by all sides of the House. The legislation will be far reaching.
I accept that the legislation we will implement — I know it will have the support of the House — will be of a punitive and prohibitive nature. There is another side to this: education and knowing one's rights. We will be working on that aspect. The Government is committed to having a thorough and comprehensive look at the whole issue of poverty. The Deputy persists in talking about the dirty dozen.
Is the Minister aware that we have been waiting for an amendment to legislation governing moneylending not only since 1987 but since I have been a Member of this House, more then ten years? Would she agree that the delay in putting this legislation through has meant that moneylending practices such as charging exorbitant interest, which is not an offence in itself and only renders the loan unenforceable, still exist? Would she not agree that the 1933 Moneylenders Act is ineffective legislation and that further delay in bringing in legislation is unacceptable?
That is why we are bringing in proper legislation. It will consolidate and enhance existing legislation. Surely it is better to bring in a comprehensive Bill rather than proceed piecemeal on the matter. There is a diference between licensed and unlicensed moneylenders. I want to put on the record the abhorrent way unlicensed moneylenders prey upon people. It is with a view to strengthening people's rights and putting prohibitive laws in place against unlicensed moneylenders that we are bringing in this legislation. I assure Deputies that the legislation will be comprehensive and will be accompanied by measures in other Departments to back it up.
This is a matter about which I expressed my concern in the past. I am pleased to hear the Minister confirm that new legislation will be brought forward in this area.
Will the Minister clarify how the penalties of £50,000 and or imprisonment up to five years, which I welcome, will be imposed?
The Director of Consumer Affairs will have power under the Bill to address those issues. I accept that there is not much point in having severe prohibitions and penalties in place unless we proceed to enforce them. I assure the Deputy that enforcement will be one of the matters addressed very strongly addressed in the legislation.
Does the Minister accept, given the tragedy of what has been happening to people in the clutches of moneylenders, that we simply cannot wait for new legislation? I am sure it will be wide ranging legislation but could she not, as a short term measure, introduce legislation immediately to deal with the specific problem associated with moneylenders and the exorbitant interest rates they charge? What is her attitude to the seductive advertising, in broad terms, of the availability of consumer credit which is causing difficulties also? Will the Minister comment on her approach to that?
As regards whether I would bring in ad hoc measures to deal with the very severe difficulties experienced by people suffering at the hands of unlicensed moneylenders, ad hoc measures are not the best way to deal with this. I am aware of the very severe difficulties experienced by people, some of whom I know, who have fallen prey to unlicensed moneylenders. The best way to address it is by introducing comprehensive legislation and also by way of public awareness. The issue in Limerick arose because the woman in question was brave enough to tell her tale. We want people to know their rights and speak up.
The Deputy asked about seductive advertising and the legislation covers that. Penalties will be imposed on those who advertise credit in large print at such and such a rate of interest but give the true rate in the small print. I commend the person, mentioned in one of the newspapers today, who took an action in the area of seductive advertising under the Consumer Information Act, 1978 against a particular banking establishment and received an award of £1,000.
Will the legislation deal with the real problems? There are many people who, because of their financial circumstances, are excluded from the normal channels of borrowing money. Will the Minister indicate how the legislation will deal with the problems facing these people for example, who need money for First Holy Communion clothes, to pay the ESB bill and so on? The Government has decided that community welfare officers should no longer have power to pay ESB bills. These are the real problems facing people in vast areas of Dublin. Will the legislation deal with this or will we continue to depend on the St. Vincent de Paul Society to bail out the Government when it fails to deal with the real issues?
The legislation will be of a punitive and prohibitive nature in the main. That is only one part of the answer. I clearly admit the need for a range of measures across Departments so that the wider issues of poverty and the issues which I freely agree with the Deputy lead people to depend on unlicensed moneylenders can be addressed. One is the educative process — community education, adult education and measures which will give people a knowledge of their rights, of the way to budget and address their problems. We need to deal in a comprehensive way with the issues raised today. The Deputy asked if the legislation would address that? Obviously, it cannot because it will address a specific issue and implement EC directives. I have spoken to a number of Ministers and Ministers of State who freely agreed that there is a need for a cross-departmental review of these problems.
Will the legislation deal not only with loan sharks but also with traders and agents who sell goods, furniture and clothing on an ad hoc basis and charge customers an exorbitant price over a period of months? This problem pertains more to rural towns than major urban centres. As the time for First Holy Communion and Confirmation approaches it is a matter for concern. We see first hand evidence of the difficulties experienced on a weekly basis. Will the legislation take care of that?
I am aware of the activities of which the Deputy speaks, some of which are perfectly legitimate and some of which are not. The Bill is consumer credit legislation. The matter of which the Deputy speaks has been brought to my attention and there may be a way by which we can address them in this legislation. I am aware that it is a real problem in many areas. I stress that there are many activities similar to those stated by the Deputy which are perfectly legitimate and give a service to people.
First, I do not want it to stay on the record of the House that I would claim paternity of the phrase "dirty dozen"; the Minister's colleague, Deputy Stagg used that phrase. Of course, it was accurate and for that reason I ask Minister O'Rourke if her discussions include discussions with the Department and Minister for Social Welfare since it is the phenomenon of the ongoing, unrepealed cuts in social welfare which are driving more people into the——
That question should be put down to the appropriate Minister and——
But it is true.
——not to the Minister in possession today. I am proceeding to another question if the Deputy does not have a relevant question to put to the appropriate Minister.
There are two Governments parties.
The question is about moneylending and the reason people are in the clutches of moneylenders is the poverty trap.
The Deputy is asking that the matter be referred to the Minister for Social Welfare.
I have asked the Minister if the discussions to which she referred include discussions with the Minister for Social Welfare, having regard to the fact that it is his cuts that are driving people into the arms of moneylenders; it could not have been more pertinent.
Let us deal with the Ministers who are responsible today.
If you agree, a Cheann Comhairle, I would be very pleased to answer that question. I have had disucssions with the Minister for Social Welfare and the Minister of State in that Department and also with the Department of Education. I intend to put them in a more structured form. To answer directly, I have had discussions with the Department of Social Welfare.
What was the response?
