Vol. 513 No. 2
2 Mr. Broughan asked the Minister for Social, Community and Family Affairs his views on recent revelations that low income families are being charged high interest rates, up to 197% APR, by legal money lenders; the plans, if any, he has to enter into negotiations with other Ministers on the establishment of credit facilities for low income earners and those dependent on social welfare; and if he will make a statement on the matter. [2002/00]
The regulation of moneylending is a matter for the Office of the Director of Consumer Affairs which operates under the control of the Department of Enterprise, Trade and Employment. The Deputy will be aware that the Consumer Credit Act, 1995, under which legal moneylenders operate, does not set down maximum interest rates for moneylending. These rates are set by prevailing market forces
My Department has a number of services available to respond to the problems arising in this area for low income earners and persons dependent on social welfare. The money advice and budgeting service, which was originally established in 1992 on a pilot basis as an approach to combating the problem of illegal moneylending, now operates nationwide through 50 local projects. The service is designed to target families and individuals identified as having problems with debt and moneylending. The projects give advice and assistance, but do not pay debts. Strong emphasis is placed on practical budget based measures that will succeed in removing people permanently from dependence on moneylenders and open up alternative sources of low cost credit through the credit union movement. Each local project is an independent information and service provider, deeply rooted in the local community. Management committees are drawn from local voluntary and statutory services and community groups and often include credit union representatives.
A review of the money advice and budgeting service is currently in progress. This review will consider how the programme is meeting its objectives and whether it is doing so in the most efficient and effective way possible. It is also intended that this review will be used to agree a strategic plan for the future development of the service so that it fully targets those who need it most. As soon as this is complete, I will consider the various issues raised in consultation with my colleagues as appropriate.
Second, through the operation of the household budget scheme with An Post, my Department assists people who receive certain social welfare payments with money management by enabling them to pay a regular amount towards various household bills by direct deduction from their payments. This scheme is used mainly to cover local authority rents and mortgages and utilities. There is also provision under the supplementary welfare allowance scheme through its exceptional needs payments, whereby persons may qualify for a once-off payment from the health board to help prevent undue hardship at times of exceptional expenditure.
Does the Minister agree that the report in The Irish Times of the Director of Consumer Affairs, Ms Foley, of 7 January was truly shocking? Most Deputies were shocked to find that a company such as Jordan Estates Limited, as quoted here, charged interest rates of 197%, down to only 85%, when we know that many of those accessing these outrageous credit terms are the poorest people in our society, the 1.3 million people for whom the Minister has responsibility. I accept that other Ministers also have responsibilities and that MABS has been established. However, instead of ordering a very basic review, it is time the Minister tried to establish a guaranteed fund for the poorest sections of society to support and expand the work of MABS and to support credit unions and the banks which still thankfully remain in the public sector, including the Trustee Savings Bank. Is it not time the Minister took an initiative in this area? The Director of Consumer Affairs, according to her report, thinks it is appalling that these kinds of interest rates are being levied on the poorest sectors of society.
I cannot answer for the Director of Consumer Affairs. If she has a problem an amendment to the Consumer Credit Act would be the route to pursue to outlaw the type of maximum rates referred to in her report. I refer the Deputy to the Consumer Credit Act, 1995, which was passed by the Government of which he was a member and which did not set maximum interest rate levels—
I was a backbencher.
The Deputy cannot abdicate responsibility – he voted for the legislation which did not set maximum interest rates for moneylending. Perhaps this is something which should be examined, but it is not an area for which I have direct or indirect responsibility.
I have direct responsibility for the progression of MABS. Since coming into office in 1997 funding for MABS has doubled. My experience of MABS, both as a public representative and Minister, is that it is one of the most successful initiatives that has been brought forward. It was introduced by one of my predecessors, Dr. Michael Woods, as a response to illegal moneylending. The issue raised by the Deputy will be considered in the course of the current review. None of us condone the high interest rates which one reads about from time to time in the newspapers. MABS assists those in difficulty in terms of moneylending. As long as I am Minister I will endeavour to assist MABS to expand even further.
Question No. 3.
The Minister has failed in this remit during his two and a half years in office. Will he accept that very often problems arise for—
I have called Question No. 3.
It is a very important question. I had very little time—
The Chair has no power over the time allowed. I have called Question No. 3.
The Minister read a prepared statement. Will he accept that at certain times of the year, namely, Christmas and Easter—
The Deputy should resume his seat.
The Minister made a long statement. We do not get a chance—
The Chair has no control over that matter. The Minister's initial reply was two minutes.
The Opposition gets no opportunity.
The Deputy continuously comes to the House full of bluster and that is the only way in which he can address the issue. The reality is the Deputy and his party were in Government an awfully long time—
I have called question No. 3.
I have seen the moneylenders.
Much more is done when Fianna Fáil is in Government than when Labour is in Government. Instead of examining the issue we take action.
The Minister is out of order.
The Deputy and his party did very little in this area.
Will the Minister please move on to Question No. 3.?
