The main purpose of this Bill, which was envisaged in the Programme of Law Reform published in 1962, is to state in a single measure and in modern terms the statute law relating to pawnbroking. In addition, the opportunity is being taken to effect a number of amendments designed chiefly to simplify the law and make it more suitable to present-day requirements. A modest increase in pawnbroking charges is also being provided to compensate for the substantial increases that have taken place over the years in the cost of conducting a pawnbroking business.
The law regulating pawnbroking is contained basically in two statutes of Grattan's Parliament, and it is remarkable that, apart from some minor amendments, spread over a dozen statutes, the law in its essential features has remained unaltered for so long. The statutes of 1786 and 1788 were in fact the first attempt of the Irish legislature to regulate the trade of pawnbroking here. Before 1786 the usury laws then in force made it unlawful to charge more than 6 per cent per annum for the loan of money, however small the loan or great the trouble connected with it. This must have made it difficult, if not impracticable, to carry on the trade of pawnbroking for small loans in an open and lawful manner.
The Act of 1786 made it lawful for pawnbrokers to charge from 25 to 30 per cent per annum. Section 17 of the Act, however, provided that nothing in the Act "should extend or be construed to extend to any person who should lend money at the rate of six per cent per annum only". This provision enabled any pawnbroker who was satisfied with six per cent—and it must be assumed that even then there were very few—to escape the restrictions of the statute altogether. This is still the law, but it obviously has no relevance to present-day conditions and it is proposed to repeal the provision without re-enactment.
There is no doubt that the pawnbroking trade is declining. In Dublin alone there are only somewhat more than half the number of pawnshops that there were in 1945. This decline in the demand for the services offered by pawnbrokers reflects the general improvement in the level of wages and employment and is indicative of the increasing prosperity of the community. In addition, the expansion of credit facilities in other directions has also had its effect. Pawnbrokers have over the years provided a very useful service to the community, and I believe there will still be room in the future for the special loan facilities which they provide. These facilities can be made all the more efficient and the interests of pawners better protected if the law governing pawnbroking is simplified and brought up to date. This the Bill proposes to do.
It is appropriate at this point to summarise the principles involved in the regulation of the pawnbroking trade by statute. There are, first of all, two classes of pawning, namely, that which comes within the Pawnbroking Acts and that which does not. The Acts apply at present where the loan does not exceed £10, and the pawnee is a pawnbroker within the statutory definition. In all other cases the contract is governed by the general law. We are only concerned here with pawning within the scope of the Pawnbroking Acts.
The reasons for regulating smaller pawnbroking transactions by statute may be stated briefly as follows:—
(1) To ensure that the pawner is given a ticket which will readily identify his property; (2) to vest the right to redeem the pledge in the person producing the ticket; (3) to enable the pawnbroker to make a specified charge for the ticket and, before releasing the goods on repayment of the loan, to demand a settled amount of interest; (4) to make it lawful for the pawnbroker to realise the sum lent, together with the interest due, by the sale of the pledge at the end of a specified period, if the pledge is not redeemed; (5) to oblige the pawnbroker to pay to the pawner on demand any surplus (termed overplus in the Acts) which the unredeemed pledge may have produced on sale, after deducting the amount of the loan and all lawful charges due; (6) to ensure that the sale of unredeemed pledges is effected through public auction.
I shall now deal with some of the more important amendments of the present law proposed in the Bill.
The first amendment I should like to mention is contained in section 3 of the Bill. As I have said, the existing statute law governs pawning transactions in which the loan does not exceed £10. This limit has remained unchanged since 1788. Having regard to the changes in money values that have since taken place, the Government consider it desirable that all pawning transactions not exceeding £50 should be brought within the scope of the statute.
Part III of the Bill deals with the licensing of pawnbrokers. The present requirements of the law in regard to licensing are cumbersome and complicated and, moreover, there are differences in the licensing procedure depending on whether the pawnbroker has his premises in Dublin or elsewhere. Many of the requirements have long since become obsolete, and should be abolished in favour of more modern procedures. Furthermore, there is no reason why the present differentiation between the licensing procedure in Dublin and the provinces should be continued.
Section 8 of the Bill provides simply that a pawnbroker shall be required to obtain a licence for each premises at which he carries on business. This licence will be renewable annually and will be granted by the Revenue Commissioners on payment of the appropriate duty to be fixed by the Minister for Finance in a Finance Act and on presentation of a certificate of suitability from the district court, for which certificate provision is made in section 10.
In considering the grant or otherwise of a certificate of suitability, it is proposed that the district court should have regard, amongst other things, to the character of the applicant, the suitability of his premises and the kind of business, if any, in which the applicant is already engaged. There will be a right of appeal to the circuit court against refusal by the district court to grant a certificate of suitability.
The changes proposed in licensing procedure will have the effect of abolishing the duty of £92 6s 2d which each pawnbroker carrying on business within the Dublin Metropolitan Police District is now obliged to pay annually to the local authority. This duty, which is in addition to the present excise duty of £7 10s, was originally imposed by a local Act of 1804 which applied the duty to defraying the charges of preserving the peace within the city of Dublin. There can be no case for continuing the payment of this duty to the local authority. Indeed, it is noteworthy that its abolition was recommended as far back as 1868 in the report of a Commission of Inquiry into the pawnbroking laws. The loss of revenue to the local authorities will not be significant, £1,200 in the case of the Dublin Corporation and £92 6s. 2d in the case of the Corporation of Dún Laoghaire.
The present lawful charges which pawnbrokers may levy have remained unchanged since 1825. I have accepted the representations of the Irish Pawnbrokers' Association that the present charges are inadequate and should be increased to provide some compensation for the substantial increases that have taken place in the costs of conducting a pawnbroking business. The Government's proposals regarding pawnbroking charges are contained in section 20 and the Fifth Schedule of the Bill.
In Northern Ireland rates of interest were increased in 1954. Up to then they have been identical with the rates here. In the case of Britain, a slight increase was allowed in 1922 on the then existing rates which had obtained since 1872. A further increase in British charges was granted in an Act of 1960, which, although reverting to pre-1922 interest rates, provided for the first time for a "valuation" charge of 2d per five shillings, limited, however, to loans of £5 or under. Having considered the merits of raising the interest rates, as was done in the North, or of following the method adopted in Britain in 1960, I came to the conclusion that the introduction here of a "valuation" or "service" fee would be the most appropriate method of meeting the higher costs of conducting a pawnbroking business. The present maximum rate of interest, namely, ½d per 2/- per month, is, therefore, being continued in this Bill. Provision is also being made in Part III of the Fifth Schedule for a new fee which is described as a valuation fee. This new fee is at a rate of 2d on each five shillings or part of five shillings of a loan. The fee will be chargeable only on loans not exceeding £10. In the case of loans over £10 special contracts will be allowed. I shall deal with special contracts later on.
The formulae proposed in the Bill in regard to the method of calculating the interest payable on loans for fractional periods of a month, and on loans which are not an even multiple of 2/-, are being modified in favour of the pawner. The present supplementary fee of ½d. on loans not exceeding 18/- is being abolished. A standard charge of 2d. is being provided for pawn-tickets. This will replace the existing charge of 1d. to 4d., according to the amount of the loan.
It is proposed in section 21 of the Bill to amend the existing redemption period, that is to say, the period during which pledges remain redeemable and may not be disposed of by the pawnbroker. At present the period runs from six months to 12 months, according to the amount of the loan. We have accepted the representations of the Irish Pawnbrokers' Association that the present redemption period is too long and operates in many cases to the detriment of both the pawner and the pawnbroker. Since 1960, pawnbrokers in Britain are not required to keep pledges longer than six months. The proposal in section 21 of the Bill represents a compromise between the British provision and our existing law. While the redemption period is being reduced to six months generally, provision is made for an extension not exceeding a further period of six months, if interest due is paid within the original redemption period. Moreover, the more valuable pledges, that is to say, articles of gold, silver, etc., are dealt with exceptionally. These pledges must be retained by the pawnbroker for a period of 12 months.
The law requires that all unredeemed pledges, that is pledges remaining unredeemed at the end of the redemption period, be sold by public auction. This requirement, however, has not been observed outside the Dublin area for many years because of the obsolete nature of some of the provisions now governing the matter. In the North, the law was amended in 1954. There, pledges now become the pawnbroker's own property at the expiry of the redemption period; and they may be disposed of as he thinks fit. In Britain, pledges pawned for £2 or less become the pawnbroker's own property at the expiry of the redemption period. All other pledges must in Britain be sold by public auction.
I consider that the pawner's interest is best served by continuing the general requirement of having unredeemed pledges sold by auction through auctioneers specially nominated for the purpose by the Minister for Justice. This is proposed in sections 29 and 30 of the Bill. However, in order to provide some relief to pawnbrokers from the rigorous requirements of the present law, at least in the case of the less important transactions, section 29 includes a provision excluding pledges pawned for £2 or under from the general requirement of sale by public auction. This relief will not extend to pledges of gold, silver etc., pawned for £2 or under. These will continue to be disposed of by public auction.
Section 15 of the Bill is an entirely new provision and is designed to allow pawnbrokers to enter into special contracts with their clients. In Britain, the law allows a pawnbroker to make a special contract with a pawner where the loan exceeds £5, but he must deliver to the pawner a special pawn-ticket specifying the terms of the contract and a duplicate of the ticket must be signed by the pawner at the same time.
The Irish Pawnbrokers' Association made strong representations to me to have a similar provision enacted here. The proposal in section 15 is that a special contract will be governed by the provisions of the Act, except in so far as these provisions are excluded by the terms of the special contract itself. The need for special contract arises, in the main, where large or very valuable articles, such as furniture, cars, etc., involving unusual storing and insurance arrangements, are offered in pawn. While the Association's representations have been accepted, it is proposed that the provision for special contract will not operate here unless the loan exceeds £10.
I hope that I have explained adequately the purpose of the Bill and have given Senators an outline of the reasons for the more important amendments in the existing law which the Bill is designed to effect. I might mention that during its course through Dáil Éireann a number of minor amendments which had been introduced to meet further representations from the Irish Pawnbrokers' Association were made in the Bill.
I trust that the Bill will commend itself to Senators as a measure of reform long overdue and that the House will agree to give it a Second Reading.
