I am glad that the Senators who have spoken have received this measure in such a positive way.
I would like to comment briefly on the points raised by Senators in the course of the debate. Senator Fitzsimons raised the issue of why there was not a cooling off period in this order. This order is essentially dealing with advertisements and claims about cost in advertisements. We are drafting another order which will deal with a cooling off period in certain types of credit agreement. That is a separate job and that is why it is not here. The Senator suggested that the building societies might not be covered by this order. They are in fact covered by this order. Building societies will have to conform wherever they have advertisements. He mentioned that the English was not eloquent in the Bill and that it was complicated with the definition of APR. One had to pursue deeper and deeper into the Bill to find it. I understand the frustration but the way in which orders of this nature are set out is that they always have a section with initial opening definitions. Then the following section nominated particular things that must be included, not just as interest but other charges. The following section that he referred to specified particular exclusions. For instance, free credit and hiring agreements are excluded. The final section went into the technical way of calculating it. While I can understand the Senator's frustration, each of the different sections to which he referred was dealing with different aspects. We believed this was the best way to assemble it. Naturally, it has to be legally tight.
Senator Fitzsimons also queried whether the exclusion of hiring could possibly exclude hire purchase agreements. This is not the case. The only hiring agreements that are excluded are those where the property and the goods do not pass. It is strictly hiring that is excluded, not hire purchase as is commonly known where, at the end of the hiring period, the goods pass to the person who is paying. The Senator asked whether advertisements not purporting to show cost would be included. This is confined solely to anything that purports to make a claim about costs. In other words, a shop that is saying that credit terms are available for certain goods would not be forced to quote APR's in such a general advertisement. But where inside it had specific claims about cost, either the cash price or the credit price, they would have to show the true rate of interest.
Finally, the Senator mentioned a particular case about central heating clubs that was recently discussed on the Gay Byrne Hour. I am aware of this matter. I have asked my Department to look into the specifics of this particular arrangement. At this stage I cannot comment on this matter. There is the possibility of a breach or misleading information which would come under the Director of Consumer Affairs. I do not know if there was a further suggestion of fraud in this case. Obviously, I am not in a position to comment on it in detail. Under the Sale of Goods and Supply of Services Act and under the Consumer Information Act there are certain powers to control agreements such as this. We will have to see whether a breach occurred in this case.
Senator Howard and a number of other Senators mentioned the banks and their exclusion from this order. While the banks are excluded at present from this order, because they are excluded from the Consumer Information Act, under a new Bill being introduced which is reforming the whole restrictive practices legislation and changing the role of the Director of Consumer Affairs, the banks will be included in future. The same point refers to Senator Lynch's proposal that a restrictive practices examination of the banks should be carried out. Under present legislation it would not be possible for the Restrictive Practices Commission to do that. When the proposed legislation, which was announced last week by the Government, comes into the House and is passed, it will be possible to apply this order and to have examinations of the banks under the Restrictive Practices Act. However, I would reiterate that the banks subscribe to the use of APR and have agreed in co-operation with the Central Bank to comply with this order.
Senator Smith developed the question of the banks' role, particularly in relation to the problems of moneylending, as did Senator Fallon. I agree wholeheartedly that there is scope for more activity by the well-regulated credit institutions in dealing with the problems of low income families. I am concerned that people who are on low income are put off by the formality applied by the banks. The banks are not always sympathetic to the sort of items people need to spend money on. As I announced last week, I am approaching the banks and urging them to become more involved. I am convinced that this is commercial business. As a number of Senators have pointed out, people are successfully paying very, very high rates of interest on alternative sources. It is not a question of people being unwilling or unable to meet payments. Very much of this business is commercial. Obviously, no one can ask a bank, or a credit union, or anybody else who is providing credit to become a charity.
The objective must be that a number of agencies who are involved in the credit business must see the special difficulty of low income families in gaining credit as a priority which needs to be tackled in a systematic way. While much of the discussion today was centred on moneylending, this measure is essentially aimed at consumer protection in the broadest possible sense. We are not just talking about moneylenders. We are talking about ordinary credit sale agreements in shops. We are talking about credit cards, Visas and so on that people have in their pockets.
This is an important measure to give information to everyone about the cost and availability of credit. It is a step towards tackling the other problem, in low income areas, of moneylending. When people have access to more information, and when the people who are close to them and who advise them have access to more information, they can be gradually weaned off reliance on sources of credit that are subject to abuse and to very high levels of interest.
Senator Lynch dealt at considerable length with the banks. He is aware that the Department of Industry and Commerce do not deal with the regulation of banks. All these issues, such as allowing new competitors into the banking area, are essentially covered under the Central Bank Acts. While our orders deal with all credit — in time when the banks come under the Consumer Information Act this order will require them to use the APRs in their quotations of credit — my Department do not have detailed supervision powers over the banks.
Finally, Senator Fallon raised the question of reform in the credit unions and, generally, the role of credit unions in relation to credit. I agree wholeheartedly with the thrust of Senator Fitzsimons and various other speakers on the great role which credit unions are playing in this area. I know of their success in dealing with moneylending problems in the past in particular areas. They have the scope and ability to contribute greatly to the remaining problem.
However, Senators should be aware that credit unions too have to protect their members' savings. They are also bound by a legal requirement in their legislation of not being able to charge more than 1 per cent per month. A detailed weekly collection system that might imply heavy collection costs might put undue strain on the credit unions. Their presence in areas where they are not now present sufficiently strongly would be a great step forward. I do not know whether Senator Fallon's suggestion is one they could take on board but I will certainly bear it in mind in discussions which I hope to have with the credit union sector in the near future.
In conclusion, I should like to thank Senators for their very constructive approach to this. Letting the borrower know is the first step in getting a much fairer deal for borrowers and for protecting borrowers.