Seanad Éireann debate -
Wednesday, 21 Jun 1995

Vol. 144 No. 1

Consumer Credit Bill, 1994: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister of State at the Department of Enterprise and Employment (Mr. Rabbitte)

The Consumer Credit Bill represents a watershed in the history of consumer protection law in Ireland. It shall alter, in an enlightened and radical way, the lender/borrower relationship that until now has been biased very much against the consumer. Simply put, this is a pro-consumer piece of legislation.

The need to enshrine readily intelligible legislative protections for consumers and to provide for their effective enforcement was never greater. There is considerable competition among lenders for a grip on the personal wallets and purses of consumers and a massive proliferation of ever more complex lending and credit products. The vast majority of consumers must rely on credit to undertake both medium and longer term purchases. Equally, some consumers have no option but to resort to short term credit in order to tide them over periods of significant financial outlay such as Christmas, summer holidays and back-to-school time. Unfortunately for many in our society, but especially for the disadvantaged and less privileged, indebtedness can be an overwhelming, crushing and spiralling burden.

This legislation installs in a comprehensive and innovative way the protections required by the many varied categories of borrower, particularly those forced to avail of the services of legal moneylenders. In addition, the Bill represents the first major assault on the heinous practice of illegal moneylending, which is a blight on the social landscape of our country.

The primary purpose of the Bill is to transpose into Irish law two European Union consumer credit directives. These are Council Directive No. 87/102/EEC of 22 December 1986 and the amending Directive No. 90/88/EEC of 22 February 1990 on the approximation of the laws, regulations and administrative provisions of the member states concerning consumer credit. These directives require member states to provide a certain minimum level of consumer protection in the area of credit.

I am pleased that the Bill, with its far-ranging reforms and extensive provisions, goes well beyond the minimum requirements of the EU directives. It repeals all existing consumer credit law that is of a piecemeal nature and does not cater for the needs and circumstances of modern day borrowers. Additionally, there will now be just one unified and consolidating comprehensive piece of consumer credit legislation.

I am also heartened by the fact that what was a good Bill, when it was published in January last year, has undergone a major process of improvement arising form both the elaborate Committee and Report Stage debates in the Dáil.

The most significant changes I am associated with are that housing loans advanced by local authorities are now within the scope of the Bill and local authority borrowers can have recourse, like other consumers, to the Director of Consumer Affairs; credit sale agreements and also contracts for services obtained on credit are included; many of the existing provisions and valuable protections of the Hire-Purchase Acts, 1946 to 1980, have been reinstated; responsibility for bank transaction charges are being transferred from the Central Bank to the Director of Consumer Affairs; and responsibility for licensing pawnbrokers will now reside with the Director of Consumer Affairs rather than the courts and the Revenue Commissioners.

I will now describe the principal provisions in the chronology and order in which they appear in the Bill. The legislation will apply to and regulate virtually all forms of consumer credit, including moneylending, hire purchase and, for the first time, consumer hire or leasing.

While the EU directives specifically exclude house purchase and house improvement loans, the Bill introduces a comprehensive regime of control on these types of lending, irrespective of the nature of the financial institution. Until now only the activities of the building societies have been subject to regulation.

It is also important to draw Senators' attention to the fact that whereas the EU directive excludes loans below the value of 200ECU and above 20,000ECU, which at present exchange rate values are about £160 and £16,000 respectively, the Bill provides for no such limits. My view, which was shared by my predecessor, is that the imposition of a lower limit would provide a legal loophole for small transactions in moneylending that, however, if added together could amount to a large sum for the borrower within a matter of a few weeks; and an upper limit would result in the undesirable exclusion of housing loans.

Legislation, no matter how well intended or progressive, is worthless unless it is enforced with rigour and constancy. Responsibility for the enforcement of the legislation is being vested in the Director of Consumer Affairs. His main functions will be to regulate and monitor the activities of all persons offering consumer credit or arranging such credit; to seek redress in the courts for breaches of the legislation; to direct lenders to withdraw or modify credit advertisements; to provide advice, guidance and information to consumers on their rights under and on the workings of the Consumer Credit Bill; to license moneylenders; to authorise persons to act as credit intermediaries or mortgage intermediaries; to investigate information given on the credit status of consumers; and to curtail and regulate bank customer charges.

A term that is increasingly in public usage and that everybody is becoming familiar with is APR. Unfortunately, in this instance familiarity is not the harbinger of enlightenment. APR is the true rate of interest. It means the total cost of credit to the borrower over the lifetime of the loan expressed as an annual percentage of the money borrowed. If this definition seems arcane, the formula for the calculation of the total cost of credit contained in the Fourth Schedule to the Bill is intelligible only to the chosen but numerate few. However, I can assure the House that this formula is the most favourable yet devised to cater for the needs of the consumer. One of its main advantages is that it provides for continuous compounding or recalculation for any period during the currency of all loans.

The media are now a potent force for the slick advertising and selling message. Consumers, when listening to the radio, watching television or reading their national or local newspaper, face an onslaught of seductive advertisements offering what seem like unbeatable credit bargains. However, they can be a source of much confusion and could lead to uninformed and expensive credit decisions. Normally these advertisements show or quote two rates of charge — the variable or fixed interest rate and the APR. By definition, as the APR includes all charges as well as interest, it is higher than the nominal rate of interest. The present text of the Bill provides that the APR must be given greater prominence than a statement of any other charge. In my view, this does not provide adequate safeguards for the consumer. Accordingly, I propose to move an amendment on Committee Stage outlawing the use of any rate other than the APR in advertisements or quotations for credit.

Mr. Cassidy

Hear, hear. Well done.

Mr. Rabbitte

I also intend to prohibit lenders showing the annual weekly repayments when, in fact, repayments have to be made on a monthly basis.

One of the most important protections introduced by the Bill is that the advertisements for credit relating to goods and services must show the cash price of the goods or service, the total cost of credit, the number and amount of instalments, the duration of the intervals between instalment payments, the number of any instalments which have to be paid before delivery of the goods and details of any deposits payable. Credit agreements, many of which are written in the archaic and quaint language of the Victorian era, are a mystery to the majority of consumers. Thus the Bill contains detailed rules on the form and content of all consumer agreements. An amendment tabled by me and agreed on Report Stage in the Dáil provides that separate, specific and transparent requirements will apply as regards credit agreements for cash loans, credit sales agreements and credit agreements for the supply of services.

Equally importantly, the Bill provides that a copy of the agreement must be handed personally to the consumer upon the making of the agreement or posted to them within ten days thereafter. In order to avoid the precipitous and often unwise entry into credit agreements, the consumer is now being given a ten day cooling off period. I would strongly appeal to consumers to avail of this breathing space to ensure that they are fully informed of and alive to the extent and nature of financial obligations which they are undertaking. The general experience until now is that adequate time or opportunity is not being given to consumers to study and, if necessary, take independent professional advice on agreements governing the granting of credit to them. Apart from mortgage documents, the invariable practice has been to produce the loan agreement and have the consumer sign it on the spot. This pernicious practice will now be illegal.

It is also critical that protections do not cease for the consumer once the agreement has been signed. It is sometimes the case that goods or services financed by, or secured on, credit may be defective in some respect or do not accord with conditions of the supply contract. The Bill imports the provisions of the Sale of Goods and Supply Services Act, 1980, that where pre-existing arrangements exist between the supplier and the creditor, then both these parties can be held to be jointly and severally liable.

Creditors sometimes pursue consumers who may have fallen into arrears by phoning or otherwise contacting them at their place of work. Due discretion or respect for the privacy of the consumer is not a hallmark of what sometimes amounts to a witch-hunt. The legislation prohibits contact at the place of employment, unless the consumer expressly agrees in advance.

For various reasons a consumer may wish to terminate a credit agreement before it has run its due date. Equally, the creditor may wish to call in a loan where repayments are not being met. The Bill provides that in each of these circumstances the consumer shall be entitled to a fair and equitable settlement and without any unjustified enrichment of the creditor. Formulae relating to early settlement may be approved by the Central Bank, in the case of agreements by credit institutions, and by the Director of Consumer Affairs for other classes of agreement.

As I mentioned earlier, the Bill incorporates all the necessary protection required by consumers when entering into hire purchase agreements. Also for the first time consumer hire or leasing agreements are being regulated. The legislation lays down rules relating to the form and content of such agreements, the right of the hirer to terminate the agreement, the obligation to the hirer to take reasonable care of the goods and the duty of the hirer to provide information on the whereabouts of the goods.

There is a demonstrable and urgent need to impose controls on consumer leasing, particularly in respect of motor vehicles. For a number of years now the financial institutions, together with the motor industry, have combined to formulate leasing schemes that have as their objective the eventual acquisition of the motor vehicle by the lessor, even though largely for tax reasons this was not stated in the lease document. Among the principal difficulties for consumers associated with this type of transaction are that many consumers do not understand the difference between a lease and a loan arrangement — the consumer cannot sell the car, buyout arrangements can be exorbitant, and sometimes balloon payments have to be made before the transfer of ownership can take place.

The present moneylenders legislation, based on the Acts of 1900 and 1933, offers little or no protection to those forced by economic circumstances to resort to this type of credit. Even more seriously, illegal moneylending, that often brings with it wanton violence and gross exploitation, has not been tackled comprehensively or painstakingly until now. One of the reasons for the failure to tackle this problem is the present dispersal of responsibility for licensing between the courts and the Revenue Commissioners with a limited enforcement role being undertaken by the Director of Consumer Affairs.

When the Bill is enacted, the Director will be empowered to grant a money-lender's licence in a District Court district in any particular district or part thereof, subject to whatever terms and conditions he deems necessary, to persons wishing to engage in the business of moneylending. Applicants for moneylenders' licences must pay an annual fee of £1,000 for a licence to trade in one District Court district and a further annual fee of £500 for each additional district or part district in which they intend to operate.

The Bill contains a list of grounds on which the Director may refuse to grant a licence or to vary, suspend or revoke a licence. An application for a licence must contain certain information, including a statement of the proposed cost of credit, details of all other charges, particularly collection charges, and the terms and conditions. Conviction for criminal offences or being the holder of a bookmakers, intoxicating liquor or gaming licence will automatically disqualify such persons from engaging in moneylending. Another important reason for refusal shall be where the proposed cost of credit is excessive and/or the proposed conditions are unfair.

Those refused a licence, or who may have their licences revoked or varied, may, within seven days, appeal the Director's decision to the judge of the appropriate Circuit Court district. The court may on hearing the appeal confirm the refusal or decision, or may allow the appeal, whereupon the Director shall grant the licence or, as the case may be, not revoke or vary the terms and conditions of the licence.

The Bill also contains provisions to deal with a number of alleged practices currently used by moneylenders resulting in the borrower not receiving the full amount of the loan although the moneylenders' records would show this to be the case. A moneylender may not give a loan while at the same time retaining a portion of it for repayment instalments or charges and then go on to demand repayment as if the full amount had been advanced. Equally the practice of retaining part of a top-up loan in respect of an amount owing on an earlier loan, while basing the repayments on the full amount notionally advanced, is prohibited.

Moneylenders will have to keep a record of all transactions in a repayment book. This means that the consumer has at all times an up-to-date record of the repayments position. It will also provide authorised officers of the Director with an effective means of checking that matters are in order.

The repayment book must contain the name and address of both parties to the agreement, the amount of credit advanced, the date on which it was advanced, the number and amount of each repayment instalment, the rate of interest charged, including the APR, the amount payable in respect of the loan, the date of expiry of the loan, and the agreement number or other reference that identifies the loan. The manner or form in which repayments are to be recorded is also prescribed in the Bill.

I am pleased the effectiveness of the legislation is increased significantly by the designation of a specific role for the Garda Síochána in the eradication of illegal moneylending. The Bill provides that the Garda Síochána is empowered to request persons engaged in collecting credit to provide a moneylenders licence or authorisation; to arrest, without warrant, persons engaged in unlicensed moneylending; and to seize any document belonging to another person being held as security by those engaged in moneylending. The last mentioned power is aimed at stamping out the wanton practice by unlicensed moneylenders of holding and cashing social welfare payment books belonging to their clients.

The purchase of a house usually represents the single most important financial transaction by most consumers. Despite this, existing protections for consumers are far from adequate. Specifically, the legislation provides for detailed rules on the calculation of the total cost of a housing loan; a clearly laid out format for housing loan agreements; early repayment of a variable housing loan without the consumer having to pay a redemption fee; exercise of choice by the consumer in taking out house insurance; a prohibition on the lender from passing on to the consumer the cost of legal investigation of title to the house; the outlawing of the linking of insurance and other services to the grant of a loan; and the disclosure of all fees, charges and commissions in connection with a loan and any associated insurance policy.

Many of these requirements are not mandatory, and, to the extent that they are, they apply solely to loans advanced by building societies. Therefore, in future there will be uniform and extensive rules and procedures that must be observed by all providers of housing loans, including local authorities. The objective of this approach is to ensure that consumers will have the necessary information to choose and decide on the form of housing loan most appropriate and favourable to their needs and circumstances.

The regulation of the selling activities of financial intermediaries in the area of mortgages and other loans is neither excessive nor rigorous at present. From now on, both credit and mortgage intermediaries will have to be authorised by the Director of Consumer Affairs and undergo strict application and vetting procedures. Consequently, consumers can have greater confidence and trust when using the services of authorised intermediaries.

Consumers can often be poorly served and find themselves in a financial dilemma having been urged on and enticed to take out endowment mortgages. Without doubt, endowment mortgages are complex financial products, not readily understood by many consumers. In opting for an endowment mortgage, the consumer has to weigh up a number of considerations relating to credit, insurance and investment, each of them difficult in themselves, while, simultaneously, making important decisions on property and home ownership. Accordingly, the Bill places great emphasis on the need for transparent and intelligible information.

Expert advice is required and this is normally provided by a mortgage or insurance broker. However, there is no doubt the high level of commission paid in respect of associated insurance policies has led to an undesirable situation of unsuitable loan endowment packages being forced on consumers.

Increases in bank charges and their proliferation over the years have been a growing source of grievance to both consumers and business customers. Customers find it difficult to understand, and the financial institutions have not been convincing in explaining, why customers should have to pay these charges when the cost of money to them is way above the level of inflation and dwarfs the level of interest paid on deposits.

Until now, control of bank transaction charges has been vested in the Central Bank. The perception is that the Central Bank has been preoccupied with more major decisions and that financial institutions have been given an easy run. This unsatisfactory situation ought not be allowed to continue.

The Bill provides that all proposals to increase charges or introduce new charges shall be subjected to detailed scrutiny by the Director of Consumer Affairs. Applicants shall have to pay a fee of up to £25,000, money that will be used to part finance the Office of the Director of Consumer Affairs and to discourage too infrequent or insignificant proposals.

The proposed new control regime has given rise to concerns on the part of the Irish Bankers Federation, the Irish Finance Houses Association and the Irish Mortgage and Savings Association. I have taken the opportunity of meeting with them and of consulting with the Director of Consumer Affairs. Arising from the consultations, I am considering amendments for Committee Stage relating to the nature of the charges to be covered; how terms and conditions by financial institutions shall be dealt with; the impact of a £250,000 fee on institutions where the volume of transactions is not significant; the stipulation of a period in which the director would be required to respond to notifications to increase charges or introduce new ones, particularly in so far as they would relate to new financial products; the passing on of third party charges, including those for the use by some institutions of the money transmission system; and allowing certain institutions to make group applications to the director, on the strict understanding that this procedure was not in breach of competition law.

The Bill is a landmark in the advancement of consumer rights in Ireland and represents a long overdue reform of our consumer credit legislation. I commend the Bill to the House.

Mr. Fahey

I welcome the Minister of State and compliment him on the work he has done on this Bill. However, I feel we should acknowledge the person who has been mainly responsible for it, that is the former Minister of State, Deputy O'Rourke. She and her officials put an enormous amount of work into the Bill. She met approximately 80 groups of people and spent most of last July discussing the Committee Stage of the Bill. It is only right we acknowledge her work and the way the present Minister of State has added to it.

The Consumer Credit Bill comprehensively addresses many of the imbalances from a consumer point of view, right across the credit sector, ranging from its advertising to its implementation, duration and determination. The essence of the Bill is two-fold. First, it will address the inherent imbalance in the relationship between the borrower and the lender; second, it will give the consumer full transparency to be able to look clearly and critically at credit products. The Bill gives the Director of Consumer Affairs wide powers to ensure the consumer is given clear communications on the one hand and a fair and reasonable deal on the other.

The Bill gives the consumer access to the full facts by creating transparency, not just on credit products such as housing loans, but also on all associated products, such as property insurance, life assurance, endowment policies, hire purchase, leasing and moneylending. This means full disclosure of hitherto hidden fees and commissions which can create bias and may mean the consumer is not getting the best or most competitive deal. I welcome that the Bill addresses in an innovative and effective way problems associated with moneylending.

In particular, I welcome that this Bill addresses in an innovative and effective way the problems associated with money lending. I particularly welcome the provision to arrest illegal money lenders without warrant. The maximum penalties for unlicensed money lending will now be increased to £50,000 and/or five years imprisonment.

However, we should try to ensure that the practical effect of this Bill will become known throughout the country, because the Bill in itself will not enable consumers to find themselves in a better position overnight. We need a massive countrywide education and communication process to show people that they have as many rights in buying money as the lender has in selling money. We have an ethos in this country where we go to our bank or building society manager with cap in hand to get a loan. It is important to change this and to teach people that they are buying money and, as such, have equal rights to the bank or building society manager who is selling them that money.

The banks, building societies and all money lenders are perceived as having a dominant whip hand position with regard to the transaction of selling money. This Bill only begins to address the situation. We must ensure that the Director of Consumer Affairs will be in a position to educate people that they now have a level playing pitch when it comes to buying money, that they are of equal standing to the person selling the money to them and that there is a wide range of controls to ensure that they get a fair deal and the best deal possible.

I would like the Minister of State to spell out during this debate exactly what he proposes to put in place to ensure that the Director of Consumer Affairs has the necessary extra resources to police this Bill properly and to provide the massive countrywide education programme which is urgently needed. For example, we were told in the earlier debate by the former Minister of State, Deputy O'Rourke, that it is intended to provide extra financial and staffing resources to the Director of Consumer Affairs. I ask the Minister to spell out exactly what he intends to provide in this respect.

We were told by Deputy O'Rourke that she intended to open, on a phased basis, offices of the Director of Consumer Affairs throughout the country starting with Cork, Limerick, Galway, Athlone and Sligo. Will the Minister of State tell us when he will have those offices opened to enable the Office of Consumer Affairs to be brought to the shop front and be available throughout the country so that people can be made aware of their rights? This Bill could then be the forerunner to introducing a new ethos in regard to the purchase of money, rather than going cap in hand to the bank manager, where most people feel that he is in a strong position and they are in a weak position.

The Consumer Credit Bill restores the balance to consumer rights in a financial services market which has become increasingly more complex and sophisticated. It seeks to tackle the smoke and mirrors surrounding many of these products, both in terms of hidden linkages and margins such as non transparent fees and commissions. There is nothing wrong with conflicts of interest and links between one product and another, or between one institution and another, provided — and this is an essential part of the Bill — the consumer is aware of such linkages. Not only is it a requirement of this Bill that such linkages be fully disclosed, but the consumer must also be made fully aware of his or her rights in regard to those hidden linkages and margins.

In the past Ireland adopted consumer credit legislation on a piecemeal basis, dealing mainly with instalment sales, hire purchase and certain types of personal loans. The primary purpose of this Bill is to give effect in Irish law to the two European Directives — Directive 81/102/EC of 22 December 1986 and the amending Directive 90/88/EC of 22 February 1990 — on the approximation of the laws, regulations and administrative provisions of the member states concerning consumer credit. However, this Bill goes far beyond those directives, and many of the initiatives taken by Deputy O'Rourke in additional areas are worthy of great praise. The further additions made by the present Minister of State are also most welcome.

The Bill strikes the right balance and addresses adequately the deficiencies and gaps in the present legislation. I know that the former Minister of State consulted widely in the drafting of the legislation with the Consumers' Association of Ireland, the financial institutions and, more importantly, those representing the disadvantaged and vulnerable in our society such as Combat Poverty, the Society of St. Vincent de Paul and money advice and budgeting services under the Department of Social Welfare.

We have only to look at television or listen to radio to be aware of the increasing power of the media in advertising and promoting such products. On radio and television and in national and local newspapers there are advertisements offering what seem like unbeatable credit bargains. However, these heavily sold offers are often without adequate and clear details of many of the important loan conditions to enable the consumer to make an informed and rational decision. This legislation provides that the selling methods must be accompanied by information on the cost of the credit and a statement of any restrictions on the availability of such credit. There will also be a legal obligation, where goods are offered on credit, that the cash price, the total price, the total credit price and the number and amount of instalments must be shown clearly.

The Bill also lays down detailed requirements on the form and content of credit agreements. Generally, consumers are not afforded sufficient time or opportunity to study, and if necessary to take independent professional advice on, agreements governing the granting of credit to them. In that respect I welcome the Minister of State's initiative in including proper control of intermediaries who act between the lender and the borrower. Apart from mortgage documents, the invariable practice has been to produce the loan agreement and have the consumer sign it on the spot. Many of those agreements are weighed down by language which is scarcely intelligible to the legal and financial professions, and there is very little hope of the consumer understanding their terms and implications.

In addition to providing for greater transparency and intelligibility, the Bill stipulates a cooling off period of ten days for all credit agreements except mortgages. It is clear that if the market was distorted with regard to a cooling off period for mortgages, it would distort purchasing and selling arrangements and leave many people in a serious situation.

The Bill also introduces important provisions in regard to moneylending, regulating most forms of consumer spending by introducing new and stronger provisions in that area — for example, regulating matters arising during and at the end of credit agreements; early repayment or prohibiting increased charges in the event of default; setting down parameters for the content of credit advertisements and credit agreements, and strengthening the Office of Consumer Affairs to allow consumers throughout the country easy access.

The process of introducing this Bill began as far back as 1992 when the EEC Directiyes relating to transparency and various matters did not deal with many of the aspects dealt with by this Bill — for example, those relating to mortgages. In her pursuit of this Bill, Deputy O'Rourke was conscious of the fact that the greatest purchase consumers make is the purchase of their home. Consequently, she extended the legislation to include mortgages. The Minister, who announced a further extension to include SDA loans or local authority mortgages, would be well advised to talk to the SDA loan authorities about looking at the interest rates they charge, which are considerably higher than market rates. I do not understand why SDA loan rates cannot be reduced to reflect market rates, which have been among the lowest for some time.

The Bill will include strong licensing and enforcement arrangements as regards legal moneylenders and strong prohibitions against illegal ones. I will deal briefly with the other outdated legislation, the Hire Purchase Act, 1945 to 1980, although hire purchase transactions are subject to stringent legal conditions. Finance companies in liaison with dealers have devised new methods of providing goods and services on credit to consumers which enables them to fall outside the remit of the Hire Purchase Act, 1946 to 1980. For example, the number of personal loans not linked formally to the purchase of specific goods or services but required by consumers for those purposes, increased markedly after the enactment of the hire purchase legislation. This Bill will remedy this mischief by adopting an all embracing approach to the regulation of consumer credit, which will ensure truth in lending.

The part of the Bill relating to moneylending deals with a number of practices allegedly used by moneylenders and which result in the borrower not receiving the full amount of the loan, although on paper that would appear to be the case. A moneylender may not advance a loan while retaining a portion of it in respect of repayment instalments and base the charges for the loan on the full amount advanced. Equally, the practice is prohibited of retaining for a top up loan an amount in respect of an earlier loan, while still basing the charge on the full loan being advanced.

It is also welcome that the moneylender will be obliged to keep a record of all transactions in a repayment book. Many legal moneylenders already operate properly. The purpose of this provision is to ensure that others do so also. It ensures that the consumer has at all times an up to date record of the position as regards repayments under the moneylending agreement. It will also provide authorised officers of the Director with a simple and straightforward way of checking that matters are in order.

The section of the Bill which covers the collection of payments is important. It will not be possible for lenders to make calls between 9 a.m. and 10 p.m. on Sundays or on public holidays. The impact of the legislation is greatly enhanced by the inclusion of the specific role for the Garda Síochána in helping to stamp out illegal moneylending. Under the Bill the Garda Síochána is empowered to request a person engaged in collecting credit to provide a money-lender's licence or authorisation, to arrest without warrant persons engaged in unlicensed moneylending and to seize any document belonging to another person being held by those engaged in money lending.

This latter power is designed to eliminate the practice by unlicensed moneylenders of cashing and holding social welfare payment books belonging to their clients. Despite the fact that this matter has been brought to public attention in recent years, there is still evidence of moneylending that is not carried out within the strict regulations which will be laid down in this Bill. There is a need to carefully police these activities which are to be found in many cities, including Galway city. It is vitally important that the Office of Consumer Affairs has the power to clamp down on moneylenders who do not operate within the remit of the law.

I thank the Minister for including extra provisions. I hope the Bill will pass quickly through this House and into law. It is a reflection on us all that this Bill has been around since 1986 and is only now in its final stages. However, it is better late than never. I commend the Bill to the House and I thank the Minister, his predecessor and the officials in the Department, who put much work into this good Bill. I hope that with proper education this Bill will become an effective tool in the hands of those who are discriminated against by a system of moneylending which has not been favourable to the consumer.

Mr. Farrelly

I welcome the Minister to the House. This morning I looked back at some of the headlines in the newspapers in October 1993 when the Bill was first introduced. They included headlines such as "Customers Always Lose Despite Growing Competition", "Bank Charges — Small Borrowers To Be Protected By Government Charter of Rights" and "New Charges — Banks Are Called To Account". I have a few comments and criticisms to make on what has happened since then in the area of charges, banking and lending to the consumers. This morning I spoke to somebody who was charged an outrageous amount of money on a loan which they had repaid in full. They were being charged a penalty because they were repaying the loan six months early.

As the previous speaker said, this Bill was discussed in 1986. It has taken us nine years to come to grips with this particular problem. I welcome the Bill for a number of reasons. The financial institutions should be regulated and, in particular, there should be some control on the way moneylenders deal with people. The Minister mentioned a number of provisions which I welcome. The provision as regards APR is welcome in that the proper amounts and costs will be advertised in the future. I also welcome the provision whereby those who have fallen into arrears will not be harassed in the workplace. For 15 or 17 years I have been involved in organising loans and helping people to organise their own homes. It is unfortunate but it is a fact of life that some people get into arrears and they do not need the type of harassment, especially in their workplace, which occurred in the past.

I accept and welcome the measure regarding a fair and equitable settlement without unjustified enrichment of the creditor. This is only right and proper. It is preferable if a position can be agreed which does not involve interest charges in addition to outstanding interest. Many banks have been most helpful in trying to reach settlements with people who get into difficulties. However, some lending institutions are not as helpful in that regard. I make this point because I have experience of dealing with banks on behalf of many people in those situations.

The Minister mentioned that applicants must pay an annual fee of £1,000 for a moneylending licence to trade in one District Court area and a further annual fee of £500 for each additional district or part of a district in which they intend to operate. How will that be controlled? If a moneylender secures a licence, what will stop him going into other districts? Who will know if he goes into other areas? How will this be organised?

I welcome the important measure that a moneylender may not give a loan while retaining a portion of it for repayment of instalments or charges. All politicians know from their experience that moneylenders have in the past retained a certain amount of the original loan and later sought repayment of the full loan amount.

I ask the Minister to deal with redemption fees in his reply. Before the Bill is enacted, I ask him to ensure that no penalties may be imposed by financial institutions when a loan is being repaid in full. I make this point on the basis that I am awaiting a response from the institution I telephoned this morning for a client who contacted me. An indication should be given that the law will be such that penalties may not be imposed on people repaying loans in full. The message that we do not agree with such penalties should go out loud and clear from this debate. With all due respect to the institutions, this is outrageous behaviour when one considers the amounts paid to the directors of many of these organisations. I hope this practice will cease as a result of this debate.

In relation to how charges are fixed and the different rates for the different services provided, financial institutions tell us that charges in other European countries are higher than in Ireland. However, the profits of the main banks in the State are increasing substantially on a continual basis. The banks' argument is that this is most important and vital to their survival. I do not doubt this, but consumers are not ultimately reaping any benefit from the large profit increases.

Small businesses, which are trying to survive, make a living and employ a number of people, pay the most in charges. They may be over their limit by perhaps £2,000 and all their transactions are subject to charges, for example, referral fees. Can proper rules and regulations be included in the Bill to ensure that charges over a certain amount may not be imposed? From discussions with people I represent, I find they pay the most in bank charges, in addition to agreed interest payments.

I find it difficult to accept the level of charges. The major institutions no longer take on full-time staff. In the future — if it is not already the case — the majority of those dealing with people at counters will be full-time temporary staff. People are no longer employed as full-time permanent staff, unless if it is for a specific job. As a result, many staff members of the major financial institutions go elsewhere for their mortgages. Some might say I do not know what I am talking about, but people have told me that they have sought loans from financial institutions other than those in which they work because, since they are full-time temporary and not permanent staff, they are ineligible.

This matter must be addressed in the changes affecting the financial institutions. I presume this situation has arisen because banks do not want to have to fork out substantial amounts of redundancy to these people who work nine or ten months of the year. Perhaps this applies throughout Europe but I cannot speak for other countries. It is a fact of life in Ireland and it probably will not change as a result of this legislation. However, it is important and it would be remiss of me not to mention how things have changed dramatically in this area in recent years.

I attended a function last night and somebody with me was asked what he thought of bank managers. This question was put to a very elegant gentleman who is high up in a financial institution and his reply was that they were like the tide; they come in and they go out. He was asked to explain this further and he said that when things are going well economically in the country, they are there to give out quite a substantial amount of funds to as many people as possible. However, when the squeeze comes, they are there to take it back as quickly as they can. His comments are true and eloquently explained the position.

I welcome the changes made by the current Minister. It is true that the former Minister did a substantial amount of work on this legislation. It is interesting to note that work had commenced on the Bill during the current Minister for Enterprise and Employment's short time in the Department in 1986. It is important to get the Bill right since it has taken so long to bring it forward. The changes which have been made, and there may be more changes before the Bill is passed, will ensure that consumers are protected by this legislation. If we do nothing more, we will be doing an excellent job ensuring that individuals at least have an opportunity to redress the balance which was not in their favour up to now. They will have an opportunity to go to the Director of Consumer Affairs who can examine individual cases.

It would be wise to implement the changes recommended by the Minister and the House should approve the Bill at the earliest possible date so that the type of problems about which I was contacted this morning will not recur in the future. If and when the consumer decides to repay in full a mortgage or other loan, be it commercial or otherwise, it should be on the basis of what is owed and penalties should not be charged on a three to six monthly basis. I welcome this Bill and look forward to the Minister's comments.

Miss Ormonde

I welcome the Minister to the House. I sat beside the Minister for nine years in another Chamber and it is nice to see him in his new post.

This is welcome legislation. I must preface my contribution by paying tribute to the former Minister of State at the Department of Enterprise and Employment, Deputy O'Rourke, for the groundwork and research she put into this Bill. I also compliment the Minister who has incorporated all the points that were outlined by the former Minister on all aspects of this Bill.

This is timely legislation. It is a new approach to the regulation of all credit which, up to now, was piecemeal. When looking for a loan, one never knew where one stood as to the procedures or the kind of information that was necessary to make a decision because they were fragmented. People never knew how to make the first approach to the credit supplier. One only has to open up the major newspapers and find up to three pages of advertisements promoting the goods or services of these institutions, which makes it confusing for the consumer to decide what they should get. In the light of all that has happened, this legislation is welcome and will be welcomed by all.

The legislation outlines the cost of the credit, the restrictions on the availability of credit, the cash price, the total credit price and the number and amount of instalments. It is important for anybody looking for credit to find out how much they will be paying every month in terms of the cash outlay and the number of instalments. Up to now, little information and advice were given as to how one would go about it. When one asked for advice, the language was unintelligible to the ordinary Joe Soap that he would be inhibited from asking another question. We must make the system more user friendly for the many people who may be daunted by the undertaking of financial arrangements. I welcome the fact that the procedures have been made very much clearer in this Bill.

This legislation will protect the consumer, especially in regard to intimidation when there is default on the number of instalments or if a person cannot fulfil his commitment to pay an instalment. I am glad to see that the legislation will forbid such practices of intimidation.

I also welcome the fact that we are now strengthening the role of the Director of Consumer Affairs regarding advertisements and credit agreements and helping the consumer, if he has any doubts about the way the credit arrangements are being conducted, and taking people to court, if necessary. However, now that he will be able to enforce the legislation, the fact that the Office of the Director of Consumer Affairs will now be regionalised with offices in our main cities, if there is an office in Waterford, how will I as a consumer know that this office is there to protect me? What kind of public relations exercise will the Minister incorporate into his legislation to get this message to the people? It is great to see this legislation, but its implementation is also important.

Before I came to this House, I never knew about Bills that were debated here. Many people do not know that this Bill is being discussed in this House. If this Bill becomes law, I would like to see second level schools being informed next September about it. I should be able to go to the leaving certificate business organisation or economics class and say that this is legislation they should know about; but how will their parents know about it? At this moment there could be people going into the banks or other credit houses who do not know there is legislation coming through this House that will protect their rights. How will they know that next September or October they will be protected? I would like to see the Minister incorporate in his presentation and the legislation a means to tell the public that we are protecting them, that the legislation is now in place and that they will know the exact cash price, the number of instalments and the kind of credit involved because it will be incorporated in the details of their loan; if they default on any payment, they will know the implications and they will not be commercially exploited or intimidated.

It is wonderful that we can discuss this legislation but the public will want to know about it. The more our deliberations are put out to them, the better. We will not do this through the media. Sometimes, the people who want to know this information do not get it through the television or the newspapers. It has to be done through residents associations, community involvement and second level schools, starting at junior certificate level. Many young people do not stay on to do their leaving certificate; they leave after finishing their junior certificate. These are the people who will be wondering if they can get a loan for a house or a car, how will they go about getting it and if they cannot get it, what does that mean? They should not be inhibited from getting a loan from the start. It is important that the public should know about it. It is great for us to talk about it in this House, but we should get the information out to the public. This is wonderful legislation and I would hate to think that we were only talking shop, that we would not go any further with it and that the public would not know about it.

I also welcome the fact that the Garda Síochána will be given more powers to protect the public against illegal moneylenders, that they will be empowered to require moneylenders to produce their licences and ensure the public are protected.

Housing loans are the biggest financial outlay for most consumers. We all know there are hidden charges when one invests in a house; there is a special charge for investigating the deeds and title and an insurance charge. The freedom to choose one's own insurance company is also important. People do not understand these charges. They do not ask enough questions because financial problems are alien to them. People are not good at thinking financial problems through.

The disclosure of all fees in relation to house loans is a welcome aspect of the Bill. Most people buying a house would be pleased to know that they will understand the cost of the house, the charge for investigating the title of the house, the insurance, etc. People do not understand what it means to take out an endowment policy and immediately run away from the idea. The public must be knowledgeable. That knowledge must be user-friendly and not consist of the jargon used by financial institutions. These institutions forget that ordinary people simply want to put down a deposit on a house, know the amount and number of instalments they have to pay, know the interest charged and the number of years it will take. This is a simple exercise but it has become very complicated. Financial jargon is used and confuses people. It is important that the hidden charges will be revealed. We will have much more transparency and accountability in relation to all aspects of credit as a result.

The Bill contains a uniform set of rules and will involve openness and transparency. Professional advice is very important when people enter into negotiation. Perhaps the Minister would ensure that those responsible for giving professional advice are not above the people. For example, people who teach computers are not really teachers. They understand the mechanism but they cannot get their message across. People who work for financial institutions are similar. They are not teachers. It is important that those giving out information — this also refers to the Office of the Director of Consumer Affairs — are able to communicate in user-friendly language and make ordinary people comfortable in negotiating one of the most important financial outlays of their lives. There must always be sensitivity for these people at such times because they are facing a major decision.

Information is very important and should be made easier to understand. People never know whether or not they are making the correct decision when seeking credit. They are constantly afraid that the undertaking is too much for them. Sensitivity is required. The Minister should incorporate it in the legislation. The financial institutions and people selected to communicate the information should be made aware that it is important the public are protected and feel comfortable in their surroundings. People are daunted by the very way that these institutions conduct their business. This Bill should be an absolute guideline for people who want to seek credit in the future.

Bank charges are another aspect which require clarification. People never know what these bank charges entail. I spoke to someone who had a loan or overdraft of £3,000. They discovered they had gone over their limit and, on their next bank statement, were charged on the basis that they had exceeded that limit. It is the bank's responsibility to give information to the client or consumer in relation to all aspects of credit and that there may be an extra charge if they borrow money and do not pay it back. It should be the responsibility of the supplier of credit to inform the consumer of this at the outset in order that they are aware of the precise position with regard to bank charges. I welcome this aspect of the Bill. I am not sure how precise it is in the legislation. The Minister should be aware that it is a very controversial, area because quite often in social conversation people will comment about bank charges they were unaware of being incorporated on their statements.

Transparency and accountability are required. The consumer should feel comfortable and this area should be made user-friendly. Those in society who do not understand finances of any kind should be protected. I am referring to disadvantaged people who do not plan for a rainy day; they buy today and let tomorrow take care of itself. These people need protection. They go to moneylenders because they may not have access to the banks or other financial institutions. I welcome the fact that under this legislation these people will be protected, educated and given assistance in budgeting their finances if they are seeking credit to buy a television or suite of furniture. They will be informed about paying their instalments and the collection time involved. This is where the scourge of illegal moneylenders comes into being. They detect that these people are vulnerable, do not understand how to do business and are not au fait with the financial institutions. These moneylenders are immediately on to a winner.

I would like the Minister to have particular regard for those who are less well-off in society, who will not attend to their business in the ordinary way or do not want to be educated because it is not part of their ethos. I have returned to where I began. The public, our children and the community at large should be educated in order that those in vulnerable situations will have access to somebody who can give them advice or help. I recognise that community welfare officers are there to set out budgets and give advice to people who need it. However, I do not know how many people are aware of this. I do not believe it is well known that I can advise someone in my constituency, who is receiving social welfare payments, on how to go about buying a suite of furniture. The ordinary man in the street needs advice. He may not want to go to the bank, or into the Office of the Director of Consumer Affairs, simply because he does not like offices or having to conduct business across a counter.

These barriers must be overcome if the public are to be educated. This is a very good piece of legislation. I believe it will redress the balance between the supplier and the consumer of credit. It will introduce more confidence and trust and a more user-friendly situation when dealing with suppliers.

Ms O'Sullivan

I welcome the Bill. It is a strong and detailed piece of legislation, which is very much pro-consumer. Before I begin, I would like to pay tribute to the former Minister, Deputy O'Rourke, and the current Minister. Both have shown a great deal of commitment to this particular piece of legislation in terms of the wide consultation they engaged in and the detailed care they have given to the legislation going through the Dáil and Seanad.

The Bill is quite detailed. It began with 121 sections and now has 153 sections dealing with all aspects of consumerism and the protection of the consumer. There will be quite a detailed examination of it on both Committee Stage and Report Stage in this House. It is a strong piece of legislation which empowers a sector of the community that sometimes suffers from a lack of power. I am referring to the people mentioned at the end of Senator Ormonde's speech — those without easy access to finance who have in the past frequently resorted to unlicensed moneylenders. They are people who basically do not have any money and who cannot, therefore, even avail of the excellent services of credit unions because they have not built up the necessary credit to get a loan. I wholeheartedly endorse the excellent work of credit unions in sections of society that do not have privileges such as bank accounts.

In 1988 a report by the Combat Poverty Agency indicated that there were three unlicensed moneylenders for every licensed one. All of us who work in public life have come across victims of moneylenders, people whose social welfare books have been taken and who have been put under other pressure to repay money they do not have. Such people have come to us, as public representatives, with their rent books, ESB and gas bills, as well as the amount they owe to the unlicensed moneylender and a whole lot of other problems. They find it difficult to feed their families. Very often it is the unlicensed moneylender who puts on the greatest pressure to repay and makes their victims' lives a misery. I am delighted that this legislation gives more power to the consumer in that regard.

The Bill also gives consumers the right to clear information about interest, repayments and the total amount to be paid back eventually. They will also have the right to a repayment book so that they can keep an exact record of what they are required to pay and will not be open to exploitation in a way that many people have been in the past.

The Bill is strong on licensing, enforcing and on the prohibition of illegal moneylenders. I welcome the fact that the powers of the Director of Consumer Affairs are being strengthened. On Report Stage in the Dáil the Minister indicated that the Director's staff will be increased from 30 to 60. In addition, a number of centres will be established around the country in Cork, Limerick, Athlone and I am not sure whether it is Galway or Sligo. There is some doubt as to which of the two places it is. People will have access to information through these centres. The fee of £1,000 is appropriate with an extra £500 if you go into another District Court area. I noted Senator Farrelly's question, which is a legitimate one, as to how you actually police it.

I also welcome the fact that under this legislation the Minister is including bank charges, which are a bone of contention for many of us. When we get bank statements we sometimes find little £2, £3 and £4 charges and we wonder what they are all about. You find that you have gone a bit above your limit and so every time you write a cheque you are being charged extra.

Computers now bounce your cheques whereas in the old days you dealt with a person who knew you and understood that while you might have temporary difficulties you were basically a good person to have around. They were understanding, but computers do not understand people, unfortunately, and for that reason it is appropriate that bank charges are included in the Bill's provisions. Consumers will have the right to know why these small sums of money, that add up in the end, are being included in their statements.

I am pleased the Minister indicated that in a number of areas he is going beyond the two EU directives in question, particularly the fact that he is including smaller loans. I forget how many ECUs it was, but many vulnerable people borrow very small amounts and so it is appropriate that they should be included under the legislation.

The APR question is as confusing to me as it is to most other people. While the Minister's definition seemed fairly concise, the mathematics in the Bill are very confusing. However, I understand that the Minister intends to convey to the consumer the ability to compare like with like. In that way you will know that what one company is quoting is comparable to another and you will not be looking at different sets of figures from one company to the other.

In the amendment that the Minister is proposing to move in this House, advertising will have to quote APR clearly without other distracting figures that might entice the consumer to go for one company rather than another. I welcome the Minister's intention in that regard.

The ten-day cooling off period referred to by many speakers is very important, because sometimes you sign things without taking the time to consider what you are letting yourself in for. The cooling off period gives people an opportunity for second thoughts. We all make quick decisions occasionally, due to pressure of time or having people ask us to do a lot of things at once. Despite what Deputy Ahern said about my party, none of us is perfect and we all make wrong decisions at times.

The people covered in this legislation are often under severe financial pressure. They need money for Christmas, Communions, school books and all sorts of urgent bills. If somebody offers them money in the hand that looks attractive they will grasp it, but they may have taken on something they cannot deal with later. For that reason the ten day cooling off period is very welcome.

The roll over system, whereby you do not receive the full amount of money borrowed until a later stage, is now outlawed and, thus, you are not paying back on something that you have not yet received. The clear recording of what people owe in repayment books is also important. The powers of the Garda have been changed so that they can take immediate action if a person is lending money without an appropriate licence.

Senator Ormonde mentioned the involvement of the community Garda, who will have an important role, because those who borrow from illegal lenders are not always very visible in society. Often, they are people who stay at home a lot and who are not strong enough to fight for their rights. The activities of illegal moneylenders can, therefore, be quite secretive and can be carried out without many people knowing about them. Community gardaí, residents' and tenants' associations know what is going on in a community and may be better able to identify an illegal moneylender than the more formal powers.

The points made by Senator Ormonde about information are important in that regard. On Report Stage in the Dáil the Minister said that information sessions would be provided around the country to make people aware of their powers under this legislation. Community information centres scattered around the country will also be important tools in conveying information more widely because the centres to be set up will only be in major cities. There are many areas outside the main centres of population where access to such information is important and community information centres will be useful in that regard. Local radio could also be used to give people information. In my experience a sizable proportion of those who have used illegal moneylenders would not be literate or would have problems with literacy and would therefore not necessarily read notices, local newspapers or information coming through their doors.

I was approached by a number of people who could not read and had debts to illegal moneylenders. They did not understand they had rights under the law. They felt they had to pay back the money, even if they had no idea whether they had already repaid it a number of times. Many people in this category listen to local and national radio, so it might be a useful vehicle for informing some of the most vulnerable people in society.

The money advice officials of the Department of Social Welfare also do good work in helping people organise repayments to their various creditors on a weekly basis. These officials should be used to the maximum extent.

The original sections 46 and 47 of the Bill, now sections 50 and 51, deal with excessive charges. If it is deemed or it is brought to the attention of the Director of Consumer Affairs that charges are excessive, there should be powers to redress that. It is also vital that the public knows that power exists. If a person thinks she is being charged too much she should have access to the Director, who in turn can initiate a legal transaction to re-open the negotiations and ensure they are conducted fairly. The provision was changed to allow access to any appropriate court, as apposed to just the High Court. It is right that the lower courts should be used where possible. Where a charge is perceived to be excessive it should be possible to re-open the matter and get redress.

I welcome the legislation, because it gives people power over what is unfortunately a necessary part of their lives. They sometimes must borrow money to pay for things they want and need. They should be protected and must know exactly what they are repaying, to ensure they are not charged excessive amounts. They should have control at all times over what they repay. This legislation is comprehensive in that regard and we will have an opportunity to look at it in greater detail on later Stages. Like Senator Farrelly, I hope it becomes law before the summer recess.

Mr. Fitzgerald

I congratulate the Minister and welcome him to the House on his first visit. He has introduced a comprehensive Bill, which will have a safe passage. It is welcome legislation and, without taking credit away from the Minister, his predecessor, Deputy O'Rourke, a former Member of this House, was much involved in bringing it to this point.

The Minister mentioned directives for the protection of consumers, which are badly needed. Consumers are pressurised every day by radio and television advertising. Mr. Niall Tóibín is in one advertisement, which states that if a person buys a car from that company, it will be taxed free of charge for one year. That may save the person up to £400, if he borrows the money from the right place.

Television advertising is getting even worse, because it now features "sky shops", or satellite selling. All a person has to do is call immediately, even if it is 4 a.m., and give his credit card number. He then has plenty of time to pay for it, because he will be paying for the rest of his life.

As to credit cards, a person gets his first card, gets into trouble with it, and then gets a second card. Soon he has a third and fourth card. Out of the blue arrives an invitation for a brand new card which will take full responsibility for all the debts on the other cards, once he signs on the dotted line.

There is no doubt protection is needed and I hope it is provided in this Bill. One matter which annoys me is when an offer specifies that a repayment is a certain amount per week, but one finds out later that payments are monthly rather than weekly. This is false advertising. I note the Minister intends to amend that section and I am delighted about that. He stated advertising for weekly rates will no longer be allowed when the repayments are monthly.

The institutions which give credit have much to answer for. Many people get caught in traps for which they are not responsible. A person's circumstances can change overnight. I will take myself as an example; I was not caught in a trap but I could have been. In 1983 I lost a Seanad election. Two months later I had a heart attack, I went to hospital and was off work for two years. If I had huge commitments, such as hire purchase payments on a car, I could not have met them on the money coming into my house at that time. I could not claim anything through having been a Senator, because what covers people while they are Members does not cover them when they lose their seats. I could not apply for unemployment assistance because I was unable to work, so all that was left to me was disabled person's maintenance allowance. I lived on that for two years.

This was not my doing. What would happen to a person finding himself in that position, who has to pay up to £300 per month for a car but only receives £80 per week? It is difficult. Where something like this happens to a person which is beyond his control, such as sickness or losing a job, and which reduces his income to a level where he cannot meet his commitments, a provision of this Bill should protect them. I have read most of the Bill, but I am not sure if this is mentioned. In order to protect people, the Bill must include a provision that a loan can be recast to suit people's new circumstances. For example, if a person's income of £1,200 a month is suddenly reduced to £400 and they must make a repayment of £200 on a car and £150 mortgage on a house, there should be some mechanism whereby that person or family can recast the loan to meet these new circumstances. If they have an agreement with a hire purchase company to repay the car loan over three years, they should be able to change that to five years.

Hire purchase companies do not care about people's circumstances; they will take the car if the repayments are not being met. People may then get a telephone call to say that a car is available at a good price. The Minister should include a provision in the Bill which states that hire purchase companies cannot confiscate a car and sell it for the amount they are owed. It should be sold for its proper value. I have seen cars which were bought from hire purchase companies and the purchaser got a bargain because it was bought for £5,000 or £6,000, although it was worth £9,000 or £10,000. The Minister must ensure that lenders do not sell goods for the amount they are owed.

Banks have the same attitude, because when they call in their loans or sell a person's property, they are only interested in getting back the amount of money owed to them. They do not care about people once they get their slice of the cake. The Minister should ensure that the true value of confiscated goods or a house taken by a building society is obtained.

If a person wishes to buy a car, they sign their name, the money is paid and they get their car. The hire purchase company does not care where the person goes or what he does with the car, provided he makes his monthly repayments. An onus should be placed on hire purchase companies to ensure that motor vehicles are insured in the same way as there is an onus on me or on anyone who has a mortgage on their home to keep it insured. People who take out a mortgage on their homes are bound by law to take out a proper insurance policy on the property. However, hire purchase companies do not care that motor vehicles should have insurance. It should be in their interest to ensure that they do. If a person in the fishing business goes to BIM for a grant for a fishing boat, the boat is not allowed to leave the harbour unless it is covered by insurance. Hire purchase companies should be obliged by law to ensure that people who borrow money to buy cars have an insurance policy. This would ensure that all cars are covered by insurance.

I do not understand why there is a demand for guarantors. If you, Sir, asked me to be a guarantor for a substantial sum of money from a bank — I would love to do it because I know you have plenty of money——

Acting Chairman (Mr. Dardis)

The Senator should not cast aspersions on the Chair.

Mr. Fitzgerald

——I am taking a risk, not the bank. I should be able to say that I will give you the money and you can give me the same interest rate. Guarantors should be scrapped. I was elected to the county council in 1974 and I was guarantor for every second person in Dingle who wanted a loan for a new fishing boat. I was guarantor for approximately 14 fishing boats which in today's money is approximately £14 million or £15 million. I also signed my name as guarantor for half the houses in Dingle.

Acting Chairman

Could the Senator be described as the face that launched 1,000 ships?

Mr. Fitzgerald

I probably could be described as such. People who hold public office know that bank managers tell people that if they vote for a certain party they should go to their local politician and he will sign his name as guarantor.

Mr. Rabbitte

That is all right for men of means like Senator Kelleher who would be able to meet such commitments.

Mr. Kelleher

I am not receiving the Minister's salary yet.

Mr. Fitzgerald

Guarantors should be scrapped. I read recently that a guarantor had to pay the full amount of money. It would take a load off my mind if guarantors were removed.

Mr. Kelleher

The Senator is being retrospective.

Mr. Fitzgerald

This is a good Bill, which includes protection for people. We will discuss it in more detail on Committee Stage. This is one of the first Bills which includes examples of mathematics which I could not understand. I thought I was back at school learning algebra when I saw the calculations such as "K is the number of the loan" and "K1 is the number of the repayment". I wish that was the case. I never saw a Bill before which included such examples. I will show it to my children to see if they understand it.

I support this Bill and I hope it has a speedy passage through the House. Many Members want to make contributions. The Minister will probably return to the Seanad on more than one occasion with the Bill because of the amount of interest in it.

I welcome the exclusion of credit unions from aspects of the legislation. They do a great deal of good and have become increasingly popular in the past couple of years. Now many of those in the poorer parts of cities go to the credit union instead of the moneylender. There is an incentive with the credit unions to save a little and then to borrow. Credit unions are usually run by volunteers, as is the case in my town. I am delighted the Minister has exempted them from some the provision of the Bill.

However, I have no pity for the other institutions. Every one of them is making a fortune, whether they be building societies or higher purchase companies. I never see any of them go broke. They make their profits from the ordinary members of the public.

Debate adjourned.

Sitting suspended at 1 p.m. and resumed at 2 p.m.