Dáil Éireann debate -
Wednesday, 27 Apr 1994

Vol. 442 No. 1

Adjournment Debate. - Illegal Moneylending.

Mr. J. Mitchell

I am grateful to the Chair for allowing me to raise the important subject of illegal moneylending which is causing so much distress in my constituency, Dublin city and other cities. This problem has existed for a long time and I raised it on many occasions in the Dáil. Despite pressure from the Opposition the Government has only taken insignificant steps to tackle the problem and they have been ineffective. When the former Minister for Social Welfare, Deputy McCreevy, introduced the dirty dozen cuts the Government greatly exacerbated the problem of illegal moneylending. Although some of those cuts were withdrawn, those that remain in place have worsened the problem. Only the poor borrow from illegal moneylenders and they pay the highest interest rates.

I wish to refer in particular to three of the social welfare cuts. First, community welfare officers in health centres may not give assistance to help pay local authority rent arrears. Second, they could help only very rarely in ESB arrears cases and, third, clothing allowances were a much less frequent aspect of the supplementary welfare system and, even when granted, they were much less than they had been. The community welfare officers, frequently called relieving officers, are relieving damn all, but that is no fault of theirs because they are acting under instructions from the Minister for Social Welfare. The result is that many of the poorest people are forced to go to moneylenders to forestall evacuation from their houses or disconnection of electricity supply, or to dress themselves and their children.

I call on the Minister for Social Welfare to remove the three remaining elements of the "dirty dozen", which the Labour Party promised would be removed. I ask him to instruct community welfare officers to help in the stressful cases of rent arrears on local authority houses to prevent eviction and to help much more generously and frequently with ESB arrears and clothing allowances for the poor.

My second request relates to a proposal I made four years ago to expand the supplementary welfare system to include interest free loans in addition to the existing grant. Many of those who go to the moneylenders should be able to get an interest free loan from the community welfare office to pay ESB arrears or to get shoes or clothes for their children. The money could be stopped at source from their social welfare payment, with a reasonable amount being deducted per week without interest. The only direct cost to the State would be the interest on the loan, but that would be offset by the fact that many people would opt for a loan rather than seek a grant.

I am not advocating what happened under the British social security system where interest free loans were made available but grants were abolished. I am not advocating the abolition of grants; I am asking that interest free loans be an option for the poor. Illegal moneylenders are blackmailing and robbing the poor and we are doing damn all about it.

Mrs. O'Rourke

I thank Deputy Mitchell for raising this issue about which he obviously feels very strongly. I know he has the interests of the people of Dublin at heart. The question relates to the continuing serious problem of moneylending and I have responsibility for legislation in this area. The Deputy ended by saying that the Government is doing very little to help those beset by illegal moneylenders. I endorse the very strong language the Deputy used to describe these people — there is no language fit to describe the rapacious behaviour of those who prey upon vulnerable people.

The Consumer Credit Bill which has been passed on Second Stage will shortly go to Committee Stage. There are no simple solutions in that Bill to the problem of moneylending, a problem that has existed from time immemorial. The Moneylenders Acts, 1900 and 1933, are being repealed in the Consumer Credit Bill. The Director of Consumer Affairs will have very strong powers under that legislation. Moneylenders must be registered and applicants for licences must pay a fee of £1,000 to trade in one District Court district and a further fee of £500 for each additional district. There will be very strong strictures on moneylending. For example, moneylenders will not be allowed top up loans, collection books must be maintained and be open to scrutiny and they must not call to a persons's house between 9 p.m. and 10 a.m. or on Sundays or bank holidays. Many calls from illegal moneylenders are made very late at night, terrorising people, particularly women in their homes. Under the legislation moneylenders must produce a letter of authorisation.

The reason I am going into the background of this matter is that this is one part of the answer to the problem, but there are also social welfare measures involved. Under the legislation there will be clear differentiation between those who legally lend money and those who illegally lend it and extract it back by extortion, by taking social welfare books and using other methods of obtaining payments at exorbitant interest rates which people cannot afford.

My colleague, the Minister for Social Welfare, has introduced a number of initiatives to help people with debt problems. In 1992 the Department of Social Welfare funded the establishment of pilot projects around the country aimed at building new and more comprehensive approaches to combating the problems of moneylending. Responsibility for making and amending rent schemes for local authority dwellings was devolved to local authorities in August 1986 and guidelines were issued by the Minister for the Environment at that time to local authorities.

Dublin Corporation confirmed that where a tenant has genuine difficulties with payment of rent arrears, every effort is made to facilitate the tenant with payment of arrears, including, where justified, the payment of arrears by instalments. The corporation has advised us that approximately 2,500 of its tenants have availed of the Department of Social Welfare household budgeting facility. In view of the discretion of local authorities in dealing with rent arrears cases, the Department of Social Welfare has asked health boards to advise tenants who seek assistance with rent arrears to consult the housing welfare department of their local authority for advice on how to deal with the matter.

A joint effort is being made to combat illegal moneylending. I am introducing a legislative programme to wipe out illegal moneylending. People should be confident to contact the Director of Consumer Affairs who will take the necessary action on their behalf, but that will take time. As Deputy Mitchell said, people need debt management advice and provision will be made in this area. There is need for local authorities to be diligent, courteous and humane in their dealings with people, and Dublin Corporation in particular is adopting that attitude with those who find themselves in arrears.

There is no need for people to use illegal moneylenders. These people are thriving because those to whom they lend money are afraid to speak up about them in the communities. I know that Deputy Mitchell feels strongly about this matter and I hope that the measures of which I speak will in time eliminate this scourge.

The Dáil adjourned at 9.10 p.m. until 10.30 a.m. on Thursday, 28 April 1994.