Deputy Éamon Ó Cuív was in possession and has some 18 minutes remaining.
Consumer Credit Bill, 1994: Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time".
Roinnfidh mé mo chuid ama leis an Teachta de Valera. Sílim féin gur Bille an-tábhachtach é seo atá os comhair an Tí. Bhí sé thar am Bille mar seo a thabhairt amach agus go gcuirfí srian le cuid de na gníomhachtaí a bhí ar bun ag daoine a bhí ag tabhairt airgid ar iasacht agus go dtabharfaí tuilleadh eolais don phobal.
The whole question of consumer credit and the making available of information in relation thereto has become much more important as the number of people who avail of that credit has increased. From circumstances prevailing 20 or 30 years ago, when credit was something most people did not avail of, nowadays most people regularly avail of credit in one form or another from businesses or lending agencies. Therefore it is most important that the customer knows what he or she is getting.
I would have to point out to the House that I was very surprised recently at being quoted two annual percentage rates, by a building society and a bank, to discover that the lower APR quoted actually meant a higher repayment on the same amount of money over the same term of loan. Until then I should have thought that whenever somebody was quoted an APR and compared it with another, such comparison would have given one an exact guide as to what constituted the best value, but I was surprised to find that that was not so.
I welcome the definition of "APR" in the interpretation section of this Bill so that we shall have a uniform description of what is involved in APR. It is important that people who shop around in the marketplace can compare like with like, can clearly establish the precise cost of what they are purchasing, the precise cost of the money they are buying; and we must remember that when we talk about credit we are actually talking about buying money. Therefore, it is crucial that the rates quoted be directly comparable.
I also welcome the provision in the Bill with regard to information on credit in that there are two pitfalls into which one can fall with regard to information — it is either too much or too little. All of us will be familiar with the syndrome of too little information; likewise all of us will be familiar with the syndrome of providing too much information. For example, usually there is too much information provided on house insurance policies, so detailed and legalistic that the ordinary consumer does not get a chance of reading it in detail. It is important that there be clear regulations in place stipulating that the information provided must be easily deciphered and discernible by the public at large.
In that connection it is particularly praiseworthy that there is proposed to be a cooling-off period involved in all credit arrangements. It is true to say that all of us become slightly intimidated when given a document of say, five or ten pages by somebody lending us money, who places a finger on it and says: "Would you sign here, please?" On such occasions it is very hard to say to such a person: "Would you give me that document? I will take it away, read it and return it in two days time". That is not the way it works. Nonetheless, there are many people who, having signed such a document, on returning home might check out the details and arrive at a second opinion. Therefore it is very important that a cooling-off period be provided, thereby ensuring the consumer's rights.
In giving the consumer rights to information or whatever, one is in no way infringing the rights of legitimate trading. Indeed, good business people are realising ever more frequently that the fairer one treats one's customers the better it will be for one's business in the long term. The contention that in some way treating customers in an open, fair manner, ensuring that common sense prevails, acts to the detriment of good business is totally wrong. Rather, I contend that good business and business practices will thrive where there is real trust between the business person, lender or whoever, and the customer. I contend that the provisions of this Bill will not impose an unfair burden on those giving credit. It will also level up the playing pitch so that the myriad of different types of credit in operation, from leasing arrangements to personal loans, loans that can be arranged over the telephone and so on, henceforth will all operate on a relatively level playing pitch.
It was crucial also that the Minister dealt with moneylending because the provision of loan facilities for the less well off sectors of our society is one problem every public representative comes across all too frequently. I have often contended that the greatest demarcation line between those people dependent on social welfare and those in receipt of a salary or wage is not the net amount they receive respectively, which of course will be different, but rather the ability of somebody with a job, an income, to borrow money at reasonable rates to carry them over bad periods compared with a person at the bottom of the pile who cannot borrow on the high street and who up to now has been forced to borrow in ways that have been totally unsatisfactory, at astronomical rates.
This area needs to be regulated and I welcome what the Minister has done. I congratulate the credit unions on the great work they do in providing credit on the basis of trust. Credit unions have proved their worth. They do not depend on the security criteria of the high street bank, rather they know their clientele. They are a great boon to society and provide a necessary service.
The voluntary agencies which help those who have debt problems, such as the Society of St. Vincent de Paul, carry out a necessary function in society. No matter how well we regulate this area there will always be people who will borrow more than they can repay and, consequently there will always be a need for a safety net. There is no worse trauma than to have borrowed money and not be in a position to repay.
There is a huge potential for development of credit unions. Large sums of money could be channelled through them into the development of local areas. In rural areas people with considerable savings who are in receipt of pensions could channel such money into credit unions rather than putting it into the bank as banks do not lend money for development of local areas.
Ba mhaith liom ag deireadh fíor-mholadh a thabhairt don Aire. Tá mé ag ceapadh go bhfuil Bille an-mhaith anseo againn. Beidh plé bríomhar air ar Chéim an Choiste agus sílim go bhfuil lá maith oibre déanta ag an Aire anseo.
I thank my colleague, Deputy Ó Cuív, for sharing his time with me. I welcome this Bill, particularly its references to moneylending. The issue of moneylending has caused much distress to a number of my constituents throughout the years. This has been recognised by the Minister for Social Welfare, who, in his speech on the budget, granted an additional £250,000 for projects to combat the problems of money lending, bringing the total allocation to £750,000. These programmes have given real help to many people on low incomes caught in the cycle of indebtedness. The household budgeting facility has proved to be very popular and a great success. However, we need a radical new approach to moneylending and that is what the Bill provides.
Those who work with such agencies as the Society of St. Vincent de Paul and the Combat Poverty Agency will immediately accept the fact that most people borrowing from a moneylender are in low income groups and cannot readily obtain credit elsewhere. Their options are limited. The time during which they seek the aid of a moneylender is usually when they are at their most vulnerable. Very often the consumer in such a case is unaware of his or her legal rights. They are either too embarrassed or lack the means or knowledge to obtain such information.
This Bill seeks to redress the social ills often inherent in moneylending by full transparency and redresses the inherent imbalance in the relationship between borrower and lender. It creates a climate of fairness and accountability in which a moneylender must work. In giving the Director of Consumer Affairs wide powers this Bill ensures uniformity and standardisation and that the consumer gets clear communications and a fair deal.
Heretofore the consumer had to fight what seemed a lone battle to establish his or her position to ensure a fair deal. He or she had to take action on an individual basis to attempt to redress that imbalance. Now, under the Bill, the Director of Consumer Afairs has the power to make changes from the top down. The Bill will not only comply with the directives and update the moneylenders Acts of 1960 and 1933 but will also deliver on the commitment on unlicensed moneylending in the Programme for Economic and Social Progress.
I welcome the fact that applicants for a moneylender's licence must pay £1,000 for a licence to trade in one District Court district and a further fee of £500 for each additional district in which they intend to operate. Under the appeals mechanism an applicant or the holder of a licence who has been turned down by the director can lodge an appeal within seven days to the appropriate Circuit Court judge.
The Bill will protect the consumer by ensuring that the moneylender may not advance a loan while retaining a portion of it and eliminating the practice of retaining from a top up loan an amount in respect of an earlier loan while still basing the charge on the full loan being advanced. The importance of the repayment book is underlined in the Bill. The fact that the Bill sets out clearly and unambiguously the headings to be complied with protects, informs and, therefore, enables the consumer to have more control over his situation.
The Combat Poverty Agency has pointed out the difficulty of indentifying unlicensed moneylenders and has stressed the lack of Garda powers to confront those suspected of moneylending without a licence. The CPA proposes that all house-to-house collectors of money carry identification. These matters have been addressed in this Bill. Repayments can only be made at certain times and calls are not to be made between 9 p.m. and 10 a.m. on Sundays or public holidays. It is proposed that the maximum penalties for unlicensed moneylending will be increased to £50,000 and/or five years imprisonment. The role of the Garda in stamping out illegal moneylending will be welcomed by all. Such provisions will ensure rigorous enforcement.
The Bill acknowledges the need to set out the essential elements for all advertisements offering credit in respect of goods and services. It is essential that there be a warning on every credit agreement about the risks involved if payments fall into arrears. The Combat Poverty Agency has always made the point that lenders have a duty to lend responsibly. Credit should be given with an eye to ability to repay. Where undue regard to ability to pay was evident, recovery of the amount should be unenforceable in the courts. Credit should be available to all provided they have the ability to pay. There is need to promote low cost credit options for low income households.
The Bill highlights the Minister's role in regulating the form or content of moneylending agreements and advertisements for moneylending as this will ensure that the Minister and the Director of Consumer Affairs act as watchdogs for the consumer. Perhaps one of the most important powers granted under the Bill to the Director of Consumer Affairs is the power to apply to the courts to have excessive rates of interest charged by moneylenders declared illegal and unenforceable.
The Bill will lead to greater uniformity and control in the area of moneylending in what will emerge as a very strict licensing regime. It encompasses and incorporates much of what those working in the social professions dealing directly with the problem of moneylending would wish and I know the Minister's work is, rightly, appreciated and recognised by them.
I congratulate the Minister on introducing this Bill. I know from my experience of clinics that people can get into very difficult circumstances due to indebtedness. As a result of their financial difficulty at the time they are unable to look ahead and see the difficulties that would arise if they were not in a position to repay the amount borrowed.
In introducing this Bill the Minister recognises the difficulty faced by many people, particularly those in the low income groups and has tried to ensure their position is safeguarded. That is highly desirable.
Debate adjourned.