I understand the Minister wishes to move to have the Bill recommitted in respect of section 33 and amendment No. 47.
Consumer Credit Bill, 1994: Report Stage (Resumed).
Bill recommitted in respect of section 33 and amendment No. 47.
SECTION 33.
Acting Chairman
We will discuss section 33 and amendment No. 47 together. As we are in Committee, Members may speak more than once.
I move: "That section 33 be deleted."
I propose to delete section 33 and replace it with the text of amendment No. 47; otherwise, the text of the Bill, as amended, would contain duplicate provisions and thereby lead to confusion.
One of the most gratifying results of the debate so far is that the text and content of the Bill have been improved. In that regard I compliment my predecessor on her openness to arguments in the House and to all Deputies who contributed to this worthwhile outcome. In harmony with this approach I am proposing extensive amendments to certain sections. On the advice of the Attorney General's Office section 33, dealing with the form and content of certain credit agreements, has been redrafted. The present text, which is a composite one, covers the various credit agreements, for example, cash loans, hire purchase, moneylending and so on.
The effect of the amendment is that there will be a general requirements provision and then specific requirements in respect of cash loans, credit sale contracts for services, hire purchase, consumer hire and moneylending agreements. The first of these provisions is contained in the new section 34 which replaces section 33. It reflects, in many instances, the contents of the existing section 33 in the credit agreement. Any contract of guarantee must be made in writing, signed by the consumer and given to the consumer at the time of making the agreement or delivered within ten days of making the agreement, contain a statement of the cooling off period and a statement of the names and addresses of the parties to the agreement and any costs or penalties in the event of failure to comply with the agreement.
These general requirements apply to all credit agreements. The new sections 35, 36 and 38 provide details of the specific requirements in respect of credit agreements for cash loans, credit sale agreements and contracts for services. Section 35 sets out the contents of credit agreements for cash loans and credit agreements operated by means of a credit card or a running account. Such agreements must contain, among other things, details of the amount lent, the amount and number of repayment instalments, total amounts repayable, the rate of interest, APR, any other charges and the means and cost of early termination.
The absence of credit sale was referred to by Deputy McDowell on Committee Stage. I am pleased I can now rectify this omission and provide for and regulate this form of credit. I am inserting the definition: "credit sale agreement means a credit agreement for the sale of goods or the supply of services under which the purchase price or part of it is payable in instalments and the property and goods where the agreement relates to goods passes to the buyer immediately upon the making of the agreement".
Section 36 details the contents of a credit sale agreement and also provides that before such an agreement is entered into the seller shall state in writing the cash price of the goods to the buyer. The requirement will be deemed to have been complied with when the goods when seen by the buyer had the price tag attached to or displayed with the goods or where the goods are selected from a catalogue price list or advertisement, the cash price was stated.
The new section 37 lays down the circumstances in which a credit agreement shall be deemed to be void. In subsection (a) a person acting on behalf of the seller is treated or deemed to be an agent of the buyer and in subsection (b) the seller is relieved from any acts or defaults of the seller's agents. These anti-avoidance provisions are aimed at dishonest or unscrupulous operators. One of the innovations of the amendment is the new section 38. This provides for credit agreements which are contracts for services.
Is that a new insertion?
Yes. If it were labour law the typical contract is a contract of service; this is a contract for services. It specifically provides for credit agreements which are contracts for services. Such agreements must contain a description of the service including any goods to be supplied with the services and the total cost of credit, the cash price of the services and the amount of each instalment and either the repayment date or the method of determining the repayment date, for example, the last day of the month or the first Monday of the month or whatever, the cost of early termination and the APR.
I am confident that these amendments strengthen considerably the position of consumers because the information they are required to be given is set out in clear and intelligible language. The separate requirements for the various categories of agreement will help to better inform consumers of their rights and entitlements. They are the cash price of the services to which the agreement relates, the amount of each instalment by which the total cost of credit is to be paid, the date or the method of determining the date upon which each instalment is payable, the means and cost of any termination of the agreement by the consumer before final payment and where applicable, the rate of interest charged, the conditions under which APR may be changed and a description of the services, including any goods to be supplied to which the agreement relates.
I thank the Minister and his officials for their tolerance of the slight delay which was occasioned by Deputy Woods running out of words which was quite extraordinary.
The way the matter is now outlined makes for greater clarity. Each type of credit arrangement is given a title and subtitle of its own and the conditions attaching to it are clearly laid down. That should be of help to the consumer. I agree with the amended version.
Our spokesperson on the Bill, Deputy McDowell, is involved in discussing the Finance Bill. As the amendments were made available this morning he only had a cursory look at them. The Minister put down some of these amendments in response to points made by Deputy McDowell on Committee Stage and I welcome them. I hope Deputy McDowell will have an opportunity to participate in the Report Stage debate. Given the large number of committees, the timetables for some committees dealing with similar matters clash and small parties find it difficult to have representation at all of them. Will the Minister explain in more detail the reasons for the changes?
I wish to reassure Deputy Molloy that this amendment is essentially a redraft of the existing section 33. The only material change between the two sections relates to the contract for services. I have taken on board the points made by Deputy McDowell on Committee Stage and there is a specific amendment to provide for this. I am sensitive to the obligations on small parties — I lived with this for a very long time — and there is no sleight of hand involved here.
All parties are interested in the Finance Bill and it is very hard for Deputies to be present at both the committee and in this House. A contract for service has a different connotation under Labour legislation. The amendment provides that a credit sale agreement shall contain a statement of the total cost of credit, the cash price of the goods to which the agreement relates, the amount of each of the instalments by which the total purchase price is to be paid, the date or the method of determining the date upon which each instalment is payable, the number of instalments, the cost of any termination of the agreement by the buyer before final payment and, where applicable, the rate of interest charged and the APR and the conditions under which the APR may be charged. This calls into question the nature, range, quality, quantity, durability etc., of services which are not easily quantified in the case of some products. Will the Minister elaborate on this point?
This amendment sets out the requirements relating to the contents of contracts for services. The Bill as previously drafted did not set out these requirements. The argument in favour of setting out the requirements is that the consumer could find himself or herself disadvantaged merely because the service being supplied was a contract for service. This amendment seeks to close that loophole. The amendment is very explicit in terms of stipulating the requirements. The credit sale agreement shall contain the total cost of credit, the cash price of the service to which the agreement relates, the amount of each instalment, the date or method of determining the date upon which each instalment is payable, the means and cost of any termination of the agreement by the consumer and, where applicable, the rate of interest charged and the conditions under which the APR may be changed. The amendment is primarily about clarity. It will also close a loophole so that people who enter into contracts for services are not disadvantaged.
Question put and agreed to.
Section 33 deleted.
I move amendment No. 47:
Before section 34 to insert the following:
"PART IV
REQUIREMENTS RELATING TO CREDIT AGREEMENTS AND CONTENTS THEREOF
34.—(1) A credit agreement and any contract of guarantee relating thereto shall be made in writing and signed by the consumer and by or on behalf of all other parties to the agreement, and—
(a) a copy of the agreement shall be—
(i) handed personally to the consumer upon the making of the agreement, or
(ii) delivered or sent by prepaid registered post to the consumer by the owner within 10 days of the making of the agreement, and
(b) in the case of any contract of guarantee relating to the agreement, a copy of the guarantee and the agreement shall be—
(i) handed personally to the guarantor upon the making of the contract, or
(ii) sent within 10 days of the making of any contract by the moneylender to the guarantor.
(2) A credit agreement shall contain a statement in respect of the cooling-off period that the consumer—
(a) has a right to withdraw from the agreement without penalty if the consumer gives written notice to this effect to the creditor within a period of 10 days of the date of receipt by the consumer of a copy of the agreement, or
(b) may indicate that he does not wish to exercise this right by signing a statement to this effect, this signature to be separate from, and additional to, the consumer's signature in relation to any of the terms of the agreement.
(3) A credit agreement shall contain a statement of—
(a) the names and addresses of all the parties to the agreement, and
(b) any costs or penalties to which the consumer may become liable for any failure by the consumer to comply with the terms of the agreement.
(4) This section does not apply to credit in the form of advances on a current account, other than on credit card accounts, granted by a credit institution.
35.—(1) A credit agreement for a cash loan, other that an advance on a current account, shall contain a statement of the following—
(a) the amount of the credit lent under the agreement,
(b) the date the credit is to be advanced,
(c) the amount of each repayment instalment,
(d) the rate of interest charged and the APR,
(e) the conditions under which the APR may be changed,
(f) any charges not included in the calculation of the APR but which have to be paid by the borrower in certain given circumstances, (g) the number of repayment instalments,
(h) the date, or the method of determining the date, upon which each repayment instalment is payable,
(i) the total amount payable in respect of the loan,
(j) the date of expiry of the loan,
(k) the means and the cost of any termination by the borrower of the agreement before the final repayment instalment.
(2) A credit agreement operated by means of a credit card or a running account shall contain a statement of—
(a) the amount of the credit limit, if any,
(b) the rate of interest charged and the APR,
(c) the terms of use and repayment, and
(d) the means and the cost of termination of the agreement.
36.—(1) Before any credit-sale agreement is entered into in respect of the sale of goods the seller shall state in writing the cash price to the prospective buyer, otherwise than in the agreement.
(2) Subsection (1) shall be deemed to have been complied with—
(a) if the buyer has inspected the goods or like goods and at the time of his inspection tickets or labels were attached to or displayed with the goods clearly stating the cash price, either of the goods as a whole or of all the different articles or sets of articles comprised therein, or
(b) if the buyer has selected the goods by reference to a catalogue, price list or advertisement, which clearly stated the cash price either of the goods as a whole or of all the different articles or sets of articles comprised therein.
(3) A credit-sale agreement shall contain a statement of—
(a) the total cost of credit,
(b) the cash price of the goods to which the agreement relates,
(c) the amount of each of the instalments by which the total purchase price is to be paid,
(d) the date, or the method of determining the date, upon which each instalment is payable,
(e) the number of instalments,
(f) the cost of any termination of the agreement by the buyer before final payment, and
(g) where applicable—
(i) the rate of interest charged and the APR,
(ii) the conditions under which the APR may be changed.
(4) A credit-sale agreement shall contain a description of the goods to which the agreement relates sufficient to identify them.
(5) A credit-sale agreement shall contain in a prominent position the words‘Credit-Sale Agreement’.
37. —Any provision in any credit-sale agreement whereby—
(a) any person acting on behalf of a seller in connection with the formation or conclusion of a credit-sale agreement is treated or is deemed to be the agent of the buyer, or
(b) a seller is relieved from liability for the acts or defaults of any person acting on the seller's behalf in connection with the formation or conclusion of a credit-sale agreement,
shall be void.
38.—A credit agreement which is a contract for services shall contain—
(a) a statement of—
(i) the total cost of credit,
(ii) the cash price of the services to which the agreement relates,
(iii) the amount of each instalment by which the total cost of credit is to be paid,
(iv) the date, or the method of determining the date, upon which each instalment is payable,
(v) the means and the cost of any termination of the agreement by the consumer before final payment, and
(vi) where applicable—
(I) the rate of interest charged,
(II) the conditions under which the APR may be changed, and
(b) a description of the services (including any goods) to be supplied to which the agreement relates.".
Amendment agreed to.
Amendment reported.
I move amendment No. 48:
In page 29, lines 30 and 31, to delete "bank or other credit or financial institution" and substitute "credit institution".
Amendment agreed to.
We now come to amendment No. 48a. Amendments Nos. 48b and 48c are related and I suggest that we discuss these three amendments together. Is that agreed? Agreed.
I move amendment No. 48a:
In page 30, to delete lines 16 to 18.
This amendment seeks to delete section 35 (2) which requires that a creditor who is party to a credit agreement must ensure that such an agreement contains a notice in the form stipulated in Part I of the Third Schedule. This notice must contain the following information: the amount of the credit advanced; the period of the agreement; the number of repayment instalments; the amount of each instalment; the total amount repayable; the cost of the credit and the APR. This requirement is being extended under amendment No. 48c which inserts a stand alone provision whereby the creditor must ensure that the agreement contains not only the notice to which I have referred but all the other information which the various forms of credit agreements must contain, for example, cash price, amount and number of instalments, the means of determining the agreement etc.
Amendment No. 48c requires that this duty on the creditor shall extend to any amendments introduced by means of regulation to either this Part of the Bill or the Third Schedule. It also has the effect that if a creditor does not meet the mandatory requirements in relation to the credit agreement the agreement shall be rendered unenforceable. However, the court may rule, subject to any conditions it may impose, that the agreement shall be enforceable if it can be shown that the failure to comply was not deliberate.
Amendment No. 48b provides that the Minister may make regulations in relation to the form and content of credit agreements and in so doing may amend or modify this Part or Part I of the Third Schedule. Does this mean that instead of setting out in the Bill the detailed arrangements for credit agreements they may be varied by way of regulation?
They can be extended or varied.
In other words, the criteria governing a credit agreement can be extended or varied.
The form and content.
Can the form and content of any credit agreement be changed under this amendment?
Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.