Amendments Nos. 145, 146, 149 and 150 form a composite proposal and may be taken together. Is that agreed? Agreed.
SECTION 48.
I move amendment No. 145:
In page 32, subsection (1) (a), line 21, to delete "or" and substitute "and".
The term "fair and reasonable" rather than "fair or reasonable" is long standing. The use of the word "or" instead of "and" in these sections resulted from a drafting error.
If it is a drafting error so be it, but the use of "or" instead of "and" dilutes the original protection being afforded. Will the Minister indicate the practical effect of the change in wording?
We are advised by the Office of the Attorney General that the correct term to be used, the one that was common coinage in legal matters, was "fair and reasonable" not "fair or reasonable".
The Minister does not want to reduce in any way what the court might interpret?
The Director of Consumer Affairs was consulted, he thought the term "fair and reasonable" was better legally, and gave the consumer more protection.
I welcome this amendment as it strengthens the intent of the section. For example, something could be seen in some light to be fair but not necessarily reasonable and vice versa. I see this as a good change. As the Minister said, it relates to what has been previous practice on the understanding of something to be fair and reasonable. I welcome the change because it strengthens the section by substituting the word “and” for “or”, As I said, something could be seen to be fair but not reasonable and vice versa, which could lead to an element of doubt.
Amendment agreed to.
I move amendment No. 146:
In page 32, subsection (1) (b), line 26, to delete "or" and substitute "and".
Amendment agreed to.
I move amendment No. 147:
In page 32, lines 27 to 30, to delete subsection (2) and substitute the following:
"(2) A court may decide in any case coming before it, whether by way of proceedings by the creditor or the consumer or by an application to it by the Director under this section, that the use of any term in a credit agreement is not fair and reasonable.".
There are two reasons for tabling this amendment. First, a consumer may bring a case in his own right; we covered that already in an amendment tabled by Deputies Richard Bruton and Rabbitte. Second, we wanted to ensure that, if the consumer wishes to proceed, he or she can go to a court, other than the High Court, which would be more expensive and inconvenient. By including the director in this paragraph the consumer is also given the option of convenience so that he or she can go to the director or to the District Court.
I welcome this change. As the Minister said, we did press for the extension of the right to take proceedings to include the consumer in respect of section 46 and, by implication we wanted that included in section 48. Therefore, that is welcome as is the fact that it is no longer necessary to go to the High Court.
In relation to the particular court to which to proceed, I believe there was an earlier amendment relating to the District Court.
On the last day.
There was talk about a competent court.
Yes, a court of competent jurisdiction.
Is it that to which the Minister refers when she talks about "court" in this instance?
Yes, because the courts have power to deal with matters involving up to a certain amount of money. I forget the amounts involved; I had the list the last day. That term means a court competent to deal with the case if it encompasses a certain element of the case that has been brought. We went through all the courts, beginning with small firms, to the District Court, the Circuit Court and the High Court. I forget the amount with which each court was empowered to deal.
And the specific amendment.
I am advised that the District Court deals with amounts up to £5,000, the Circuit Court with amounts up to £30,000 and there is no limit in the High Court. The amount in the small claims court will be increased to £1,000.
The amendment the last time specified competent court rather than District Court. Will that be brought back on Report Stage or was it agreed?
No, we agreed it.
I agree with the remarks about this amendment and welcome it. Probably this is as useful a place as any for me to say I intend to withdraw my amendment No. 148.
On a point of clarification, in the amendment where it says "an application to it by the director under this section", under this section the director seems to be able to apply only to the High Court for a declaration. Are we restricting the director unduly by saying his applications can be to the High Court only? Is there a need for tidying up to make it clear that, where appropriate, the director, if he was not seeking a declaration, could apply to a lower court? My understanding was if one was seeking a declaration, one had to go to the High Court, but that the creditor might not necessarily have to proceed by way of a request for a declaration which would have to be in the High Court.
I see what Deputy Bruton means because the declaration can be sought only in the High Court. I think it is in order there to use the term "a court".
The director does not have any power under the section unless the Minister is giving it in this new amendment.
Subparagraph (2) of the amendment says: "A court may decide in any case coming before it whether by way of proceedings by the creditor or the consumer — with which all agree — or by an application to it by the director under this section that the use of any term in a credit agreement is not fair and legally reasonable". The director has power under that section.
The director's only power under the section is to apply to the High Court for a declaration.
Yes, it says he may apply to the High Court for a declaration. We will have to tidy up that terminology. I will retable it on Report Stage. The intention is that it would be a court of competent jurisdiction. It may warrant clearer definition.
I am not clear about the reference to the Director of Consumer Affairs. I know there was a debate on an earlier amendment on a similar type clause. Does this indicate a diminution of the powers of the Director of Consumer Affairs? I understand there was debate on an earlier term in relation to challenges — that they be channelled through the Director of Consumer Affairs. Does this amendment use a different type of argument; in other words, is the Minister resorting to a different logic in this amendment than earlier in the Bill?
No because the earlier two amendments tabled by Deputy Rabbitte and Deputy Bruton sought to give the consumer an option to go to the director or to the courts themselves.
This is done through the director?
No. It says: "A court may decide whether by way of proceedings by the creditor or the consumer or by an application to it by the director...." Therefore, the court will deal with it whether it comes from the consumer or through the director.
Did the Minister accept that earlier?
I did. We accepted that last week; at least I understood we had so agreed.
Does the same distinction apply here? There was something of a distinction drawn between the amendments tabled by Deputy Bruton and myself. Deputy Bruton's amendment contained superior wording in that not only did he confer the right on the consumer but on somebody acting on behalf of the consumer. That is probably an important distinction in that some organisation working in this area would be able to take the case for a consumer, who, for whatever reason, would not be able to do so himself.
I had an informal discussion with somebody else just before we came in here about that matter, is that to what the Deputy is referring?
Does the same distinction apply here, as between the consumer and an organisation acting on his or her behalf?
The comments by Deputy Rabbitte raise a question because we undertook to accept the consumer or a group or body acting on behalf of the consumer. I also want to make it clear that the court is the court of whatever lower branch one wishes to go to. That needs tidying up. If the Deputy will accept the thrust of the amendment I will try to get the correct wording.
The preponderance of cases we are dealing with here are probably at the end of the market where the consumer would not have the capacity to take the case. It is important to be explicit, therefore, that organisations like those we were talking about the last day would be able to sponsor the case on the consumer's behalf.
That is right.
A person can be represented at social welfare and employment appeals and the Act should be consistent in that regard.
Deputy Kemmy is right. Frequently in our constituency work we are asked to go with people to an appeals hearing. The thrust of the amendment is in line with what we were doing earlier but there must be a more precise wording.
This important amendment arises out of the last debate on this general topic. I am glad to see the word "consumer" being used now because this matter was teased out at some length when we last debated the legislation. It strengthens the hand of the consumer. As other Deputies said, I would like the Minister to deal with the question of second or third parties taking cases on behalf of the consumer. If that was addressed it would finally tighten up this area in the way that all of us who contributed to this debate sought to achieve. It is an important inclusion and strengthens the legislation.
The Deputy is quite right. In practice I expect many people will go to the director because he will be well versed in those matters and as more cases come before him he will gain greater competency. We have taken out "the High Court" and put in "a court", meaning that it would be available in a court of lesser appeal or major court. We have to tighten the wording on that.
Amendment agreed to.
Amendment 148, by leave, withdrawn.
I move amendment No. 149:
In page 32, subsection (3), line 32, to delete "or" and substitute "and".
Amendment agreed to.
I move amendment No. 150:
In page 32, subsection (4), line 33, to delete "or" and substitute "and".
Amendment agreed to.
I move amendment No. 151:
In page 33, subsection (5), between lines 20 and 21, to insert the following:
"(c) revising or altering any term of the agreement,".
The purpose of this amendment, recommended to us by the Director of Consumer Affairs, is to allow the court, in addition to the options already provided for in this section from (a) to (e), to revise or alter any term of the agreement where such term is not, in the opinion of the court, deemed to be fair and reasonable.
That is a welcome change. I would like to clarify a point raised previously. Since we defined "consumer hire agreements" differently from "credit agreements", will this section apply to consumer hire agreements? A query about this was raised by the Coolock Community Law Centre and the point should be clarified.
I will clarify that point for the Deputy later, I do not have it to hand.
Amendment agreed to.
Amendments Nos. 152 and 153, by agreement, to be taken together.
I move amendment No. 152:
In page 33, lines 26 and 27, to delete subsection (6) and substitute the following:
"(6) This section does not apply to any credit agreement relating to credit advanced by a credit institution or a mortgage lender.".
This is the amendment on which we had a heated discussion. If it is appropriate I would like to hear what Deputies Bruton and Rabbitte say about this amendment.
The Minister has not accepted the earlier approach where we believe there should be a level playing field and that in respect of any charge and any term all credit institutions should be treated in the same way. In respect of this amendment, the experience of the past ten days shows us the weakness of the Minister's position. One particular bank proposed to have in its credit agreement a term which was held to be offensive by the Minister, presumably by the Director of Consumer Affairs, if he had been consulted and perhaps by a court if it had gone to that level. We are providing that such a clause could not be challenged. I am referring to a case where the Bank of Ireland sought to foreclose on mortgages if a borrower got into difficulty on any of his-her loans, not just the mortgage loan. That could give rise to a situation where if all the bank payments were up to date on the mortgage, the bank could move against the borrower. It has transpired since that the ACC has a similar provision in its loan agreement although it is questionable whether the ACC has any intention of using it in the way it is alleged that it could be used.
If the Minister maintains the position that the Director of Consumer Affairs cannot examine the credit terms of a bank, building society, insurance company, ACC, ICC, Trustee Savings Bank, insurance companies and all the other institutions she proposes to exclude, and if none of those credit agreements can be examined for fairness and reasonableness, we will be pulling the mat from under this as a general provision protecting borrowers. Thankfully 90 per cent of borrowing is probably from those credit institutions and while many would be keen to protect people who have to go to moneylenders, I do not see why we should not extend the same protection to people who have to go to finance houses, for example, who often charge very high interest rates. Also, when people are on their knees looking for credit, those institutions can slip in terms that would not be regarded as fair or reasonable. We should preserve the protection uniformly for all credit agreements and the director must be allowed to survey all of them. The banks and building societies, if they are as good as they believe they are in providing fair and reasonable credit terms, having nothing to fear from this provision.
In addition to agreeing with that I remind the Minister that the reason she dug in her heels on section 46 was her adamant position that she had no control over interest rates.
It was, yes.
That was the net point at the end of the debate. She did not take up the position, that she was against the thrust of the amendments from Deputy Bruton and myself but rather, that she did not have any power in the area of interest rates. This does not deal with interest rates but with the terms of the credit agreement. I cannot see why banks should be treated differently. In addition to the case Deputy Bruton cited where the Minister had to intervene, the nature of the agreements with banking institutions and building societies is so opaque from the point of view of the consumer that the insertion of such a term is not all that unusual. There is no argument that I can see why they should not be open to the same scrutiny and challenge as any other lending agency.
I am reminded of the GPA case when a person's other bank account was raided to pay for his borrowing during the shares flotation. It was a separate and distinct account and my memory is that he challenged that action in the High Court. That may be all very well for somebody who has both the knowledge and the capacity to do so, but for many consumers that is not the case.
I plead with the Minister that there is no argument for excising banks and building societies. They should be open to the same challenge and scrutiny as all other lenders of money. They have the dominant share of credit in the economy and it is more important than ever that they be open to this scrutiny. The section is the weaker for it and I plead with the Minister to reconsider. No argument about interest rates or anything else applies; it is merely if the consumer or the Director of Consumer Affairs feels that a particular term is unfair or unreasonable that it is open to challenge. It is eminently fair and in accordance with the principles of natural justice.
I will take up Deputy Rabbitte's last point. There is no argument between us on this. I am not pushing my amendment but will accept that in the names of Deputies Bruton and Rabbitte. I see the point precisely. We had a long argument last week about interest rates and it struck me that anything else contained in an agreement outside interest rates are the terms. There is a new EU directive which must be implemented by the end of this year called the unfair terms in consumer contracts. It is quite precise and will cover this ground in more detail. We will implement it by regulation and I will have it in the autumn before we complete our work on this Bill.
Amendment, by leave, withdrawn.
I move amendment No. 153:
In page 33, lines 26 and 27, to delete subsection (6).
I am very pleased that the Minister of State has cast aside her role of being fairy godmother to the banks and lending institutions.
They do not think of me like that.
It took some time to convince her——
It took some time to talk.
——that the amendment tabled by Deputies Bruton and Rabbitte to delete section 6 was appropriate.
It took one minute.
It took two days of constant barracking to convince her.
The Deputy is on the wrong amendment.
I am not; it is the amendment to section 48 (6).
But the interest rates are not included. Before the Deputy goes off on a high gallop to Skibbereen——
I am not going on a high gallop. I am delighted the Minister has seen the light.
The interest rates are not included.
The people who borrow money from the banks and lending institutions must be protected as well. No special incentive should be given to any lending institution. They should all be treated equally.
The amendment put forward by Deputies Bruton and Rabbitte deals with the terms of credit agreement. I am glad to accept it. It does not take into account interest rates.
Deputy Sheehan was not accurate when he said the Minister relented because of constant barracking, etc. We had an intense debate at the last meeting and the arguments put forward, particularly by Deputies Rabbitte and Bruton, were well reasoned. The Minister had time to reflect. She heard the points made, including those on my side of the House, and on the basis of that debate and exchange of information she decided to proceed as she has this morning, which I welcome.
Banks and lending institutions should welcome their inclusion in this legislation. Given the Minister's interest in the banking area and the changes that she wrought from the banking institutions on individual matters, such as that to which Deputy Bruton referred recently about a specific bank and a particular term of agreement, to suggest that she is some kind of fairy godmother to the banks is wide of the mark.
They would laugh at that.
The Minister may have difficulty getting in the front door of banks and will need a card to enter if she keeps pressing matters as she has. I welcome the amendment. We have been concerned, not just about the interest rates — which is a separate matter — but about the extras in agreements which increase the cost, make it more difficult to extricate oneself from and which weaken the hand of the consumer. All we are saying is let us level the playing pitch and make it clear that an agreement between a lending institution and a consumer is fair. If it is seen to be unfair, the institutions know that the consumer, acting individually or through the Director of Consumer Affairs or a third party, can take up the case. In other words, there is redress for the consumer. That will, to some extent, enhance the image of the lending institutions which, for a variety of reasons, has been receiving a bad press lately. This is an attempt to level the playing pitch between the consumer and the lending institution.
I congratulate the two Deputies for putting forward the amendment and I applaud the Minister for listening to the argument made at the last meeting. I did not think she would accept it and it comes as a pleasant surprise that all our arguments were not in vain.
Whether it was barracking or sweet reason——
It is not correct to describe it as barracking because we have a terrific debate on this Bill with those who attended regularly from the beginning.
Whatever the reason, and I am sure it had more to do with sweet reason, but having heard Deputy Sheehan on a previous Bill, I wonder. The principle is correct and I am delighted the Minister has agreed to this amendment. I do not see why a bank or a lending institution should have favoured terms particualarly in relation to this section of the Bill. I was surprised when I saw it and wondered why that was the case. I am glad I missed out on the lengthy debate on it but equally, I am glad the Minister has accepted the amendment.
Deputy Keogh is welcome to this committee and I wish her a happy birthday.
A cake is out of the question.
I want to refer to a point I raised last week. I had a parliamentary question on interest rates charged by lending institutions disallowed in the Dáil. I will read out the question and the reason for the disqualification:
To ask the Minister for Finance if he has satisfied himself that interest rates being charged by the banks to the customers are justified in the prevailing circumstances; and if he will view these rates in conjunction with their profits.
The Ceann Comhairle states in his letter of reply:
The Minister has no official responsibility to the Dáil in relation to this matter which is one of the lending institutions themselves and for the Central Bank.
We were speaking about the meeting of the Taoiseach and the Minister for Finance with the lending institutions and I made the point there would be no action taken as a result of their discussions with those lending institutions. The fixing of the rates is a matter for the lending institutions and the Central Bank. What can the Government or the Minister do?
What can the Minister for Finance do?
Can the Government dictate to the Central Bank and to the lending institutions?
We had this debate last week.
This is the documented explanation why the question has not been answered; clearly it is the Central Bank's duty if the lending institutions do not do it. What can the Minister do?
I cannot do anything about interest rates.
What can the Government do?
When I answered this last week I said I did not know why the Deputy did not get a reply in the Dáil. I gave the answer that was in my brief. I do not have the authority to deal with interest rates.
It is a major cause of concern that the Central Bank is not doing what should be done, and the Taoiseach re-echoed that. Some action should be taken against the Central Bank in those circumstances.
The point has been made and I would now like to make progress.
I welcome the Minister's acceptance of this amendment. It proves that our discussion last week has been worthwhile. It may have been tiresome to go through all the arguments but we teased out some distinctions; maybe that is the product of spending a good deal of time on it last week. I want to express sympathy with the point Deputy Deasy raised. He has been told that the Minister for Finance cannot influence or discuss margins on interest rates; neither can the Director of Consumer Affairs. It seems the Taoiseach called for an explanation why the gap between interest rates on larger deposits and interest on working capital has widened from 2.75 per cent in 1979 to 10.75 per cent now. We have never seen that explanation. The Central Bank offers as an explanation — something that is incredible, namely, the introduction of a tax concession — the 10 per cent deposit account which it says is responsible for the widening gap. When the taxpayer gives extra benefit to the banks to win customers it ends up causing a wider margin for the borrower. An explanation is required. The Taoiseach asked for it and Deputies are frustrated in the Dáil as to who is going to give us that explanation now that it has been asked by the highest Government official in the State.
Will the Central Bank be called to one of the special committees? I thought there was talk about that.
I think there was some talk about it.
I am pleased the Minister has accepted the amendment but what concerns us most is what she has not accepted, namely, responsibility for interest rates. There is a matrix of interest rates agreed between the banks and the Central Bank and one of the problems is that customers do not know, over a whole range of quoted interest rates, which one applies to them or what recourse they have if they believe they should be on a lower rate. The Minister has responsibility to ensure that information is provided in a way consumers can understand the interest rate which applies and the recourse they have if they feel the rate they are being charged is excessive for the risk undertaken.
One of the reasons interest rates are higher here than in other economies is the lack of competition in the banking sector. The Minister has responsibility for competition in the economy. Various studies have been quoted from time to time. The Culliton report is produced now as if it is the New Testament and competition is the criterion by which political progress, and how it affects economic policy, is measured.
As far as I can see, there is very little competition in the banking sector and the business borrower and the ordinary consumer has recourse to a choice between Tweedledum and Tweedledee. The Minister also has responsibility for costs in the economy and interest rates are a significant cost both in business and in personal expenditure. The Minister has responsibility for costs; she has responsibility for ensuring there is competition and information is available so that costs can be reduced across the sector. That appiles to the cost of money as well as other costs. The Minister has not responsibility for another element, but the Government and the Minister for Finance have, which is that if people borrow abroad at more advantageous interest rates the Government should be in a position to give a reasonable indication of the exchange rate risk.
It is not true that this is an area of the economy that operates independently of the political process and that politicians cannot intrude because the Central Bank is independent in the exercise of its statutory functions. That does not stand up to analysis, and none of us envisages Ministers for Enterprise and Employment or Finance having a directive role in regard to interest rates charged in any particular week by an associate bank. There is more than one way of skinning a cat.
There are three courses of action I suggested must be taken on board by the Government because things are not as they used to be and I believe the Government has now adapted the idea of a competitive economy as the central point of its economic policy. However, if this simply applies or costs other than the cost of money, there will be no control of one of the main levers of a modern economy. What does the Minister intend to do to provide information on interest rates that the consumer can readily understand? What does the Government intend to do about competition, because there is no competition in that sector at the moment?
The question of information which Deputy Noonan touched on clearly comes under the brief of consumer matters for which I have direct responsibility. With regard to competition in general or the climate of competition, there is nobody at this table who would not agree that it is the non-competitive nature of banking that has left us, and that sector in particular, in such a parlous state as to how people view it. Because there has not been much competition up to now, it has been possible for one bank to increase a transaction charge one month and for another to fall in line six months later, leaving one wondering when exactly the arrangement was made between the two banks to so do. Such semi-collusive activities in which banks clearly have been indulging inculcated cynicism among ordinary consumers.
With regard to general economic competition and interest rates, I agree that people are increasingly asking questions which they did not ask heretofore. One did not dream of questioning the role of banking institutions but, more and more, people are rightly demanding reasons. There is a new era dawning in which consumers will be more interested and demanding and will challenge those matters.
I will consider what the Deputy said about information in a general sense. However, he has crossed the divide between the question of precise information about interest rates and that of knowledge about how and why that interest rate was arrived at but, yet, I do not have authority in that area. Where behind cold hard factual information there are further undisclosed facts, the question of where the right to information ends is an interesting one.
The question of information raised by Deputy Noonan occupied us quite substantially as we would our way through this legislation. Section 31 contains a great deal of what will, in future, be required in relation to credit agreements. We discussed that step by step. Withing section 31 there is a great deal of information which, although provided on a voluntary basis by some institutions, was not stitched into legislation before. Now, from the moment one makes contact with a credit institution, the information one is entitled to is set down precisely. We spent a considerable length of time discussing how information about the APR would be forthcoming and we were concerned that such terminology is not helpful to consumers. If section 31 is followed properly by the lending institutions, the consumers will be far more advantaged than heretofore because they will now have the backing of legislation. It is an important issue that impinges upon competitiveness in the marketplace that information should be available to people when they do business with a lending institution to ensure that they are making decisions based on actual and factual information and not on the basis of information withheld which we think, having debated this legislation, was the case in a great number of instances in the past.
I appreciate what Deputy Flood has said about section 31, but I am approaching it from a different viewpoint. On most occasions when people do business with the banks — this also applies to business people — the first issue is whether they will get the money. It is later that the terms become a real issue. Frequently, the anxiety to get the money diminishes prudence in scrutinising the terms. The provisions of section 31 are very helpful in that, after the event, people will know what they have taken on, but I do not think it will help them to get a better deal. What I am talking about is information that is available in other shops. There is a great deal of mystique about the banks but, in simple terms, a bank is simply a shop that buys and sells money.
People should treat the article they buy like any other article and question and tease out the terms.
Some charges are included but, basically, the interest rate is the price. There is legislation in place which requires garages to display their prices, although not all of them comply with it. Similarly, in a pub, I know the price of what I am buying. In a clothes shop or a supermarket, usually all items are marked with the price. However, people are getting into a contractual position with the banks where the opening position is the question of getting money and the terms are secondary. The consumer is in a quasicontractual situation before the terms are available in detail. Section 31 will help the banks because now they have the full protection of the law and can say they wrote out all the information, that such are the terms agreed to and this is what must be paid. There is no attempt to flag in general terms the range of options available to any customer, whether it is a private consumer or a business person. That is a very big gap in our economy and, in the absence of proper competition between the banks, I suggest the Minister should move to remedy it.
The question Deputy Noonan asked is in a general sense a very real issue. I constantly say that when people go to a mortgage seller or a bank they should not feel subservient because they want a loan, a mortgage, etc. A gap is created because those who lend are in a position of superiority and those who want to borrow are in the position of supplicant and that imbalance leads to an uneasy relationship. It is a product like any other but one is so keen to get it that one grabs it and it is only afterwards one realises some of the terms.
In the general debate on this Bill I hope we will have engendered in the public the idea that a door is beginning to open on what the consumer should rightly and properly know about a credit purchase and that there will be a more even pitch between those who lend and those who borrow. I am under no illusions. There is a long road ahead of us. The nature of buying and selling credit means that the pitch is uneven, but as we continue to highlight this issue and introduce Bills such as this, consumers — I hope — will have more power and will question such matters. When I was a teacher young girls who got four As and two Bs in their leaving certificiates could not tell me how to go about getting a mortgage or how to put forward their case to a bank manager — they had academic knowledge but had no knowledge about ordinary life.
Is it not now time the Director of Consumer Affairs set out a list of comparative terms used by the various lending institutions? By enabling him to do that the gap in information will be filled over time. Under the original legislation one of the explicit tasks of the Director of Consumer Affairs is to inform consumers about issues of importance to them. I hope the Director of Consumer Affairs will have the resources and staffing to do this in the area of consumer credit.
In other words, raise awareness and consciousness about it.
And create competitiveness by exposing the information.
On the question of supplying information to the consumer, particularly before he enters into an agreement, Part II seeks to address the issue of advertising, particularly as it relates to consumers who buy products in a store which arranges credit. When we discussed this matter we expressed concern that much information could be hidden and that the consumer in his or her anxiety to complete the deal would not read what may be a very lengthy credit agreement which may contain difficult to understand information which, properly, should be set out in detail. Such information must be set out clearly and specifically for consumers. Part II goes some of the way towards meeting the concerns expressed by Deputy Noonan and will ensure that the information is set out clearly for consumers before they enter into agreements.
The ten day cooling off period for consumers is also very important. We have all met individuals at our clinics who entered into agreements which they cannot get out of; they acted too hastily and did not discuss the terms of the agreement with members of their family, etc. The ten day cooling off period, based on proper information given at the outset, will help and considerably strengthen the hand of the consumer.
I compliment the Minister on being so candid; she is endeavouring to do her best. Perhaps she should have met the banks and lending institutions.
I meet them on a regular basis.
Does she discuss the issue about which we spoke?
I do not discuss interest rates.
Why? I would have more confidence in the Minister than in some other senior politicians to get results — at least we can communicate with her.
When you get the Taoiseach's job you can see to that.
I am talking about the junior Minister getting the Taoiseach's job — it would be an ideal opportunity for her to relaunch her political career at the highest level. I am merely being facetious.
I am overwhelmed.
She is not objecting to the idea.
In the context of the points raised, we would appreciate if the Minister would meet the lending institutions and ascertain the reasons for the disparity in the interest rates and why, despite the intervention of the Taoiseach, they are not being lowered.
I meet the lending institutions on a regular basis — the arrangement began with this Bill and will continue in the context of general consumer information. However, I do not touch on the subject of interest rates. Bearing in mind the strong push Deputy Deasy is giving me perhaps——
Maybe the Deputy will get his way.
I am sure the committee, including the Chairman, would agree.
I would not object.
Amendment agreed to.
Section 48, as amended, agreed to.
NEW SECTION.
I move amendment No. 154:
In page 33, before section 49, to insert the following new section:
"49.—The Central Bank shall inform the Director of Consumer Affairs of any proposed changes in charges being notified to it, and take due account of the views of the Director and of any Codes of Practice issued by the Director in responding to the notification.".
Will Deputy Bruton defer his amendment until we reach my amendment which goes beyond what he proposes?
I seek the guidance of the Chair on this point. Last week the Minister said she had obtained agreement to transfer the powers under section 28 of the Central Bank Act to her Department, with the Director of Consumer Affairs playing the role of the Central Bank and ordering lending institutions to refrain from imposing charges without his prior approval. When this is done my amendment will become redundant. I presume the correct thing to do at this stage is to withdraw my amendment pending the Minister's Report Stage amendment.
It will not be a Report Stage amendment, it will be a Committee Stage amendment.
Is it possible to defer my amendment and take it with the Minister's amendment?
I hope the Chair will agree to that proposal.
To which section is the Minister referring?
My amendment proposes to introduce a new section in the Bill and I was hoping Deputy Bruton would defer his amendment and take it in conjunction with mine.
My amendment proposes to insert a new section and the Minister proposes to incorporate a section from another Act.
To clarify a procedural point, under our terms of reference there is no facility whereby we can do this. The Deputy need not press his amendment and may resubmit it on Report Stage, the appropriate way to deal with the amendment. The amendment put down by Deputy Bruton on Report Stage will depend on the Minister's response at this stage. Is that acceptable to the Deputy?
Yes.
Will the Minister state if it is intended to transpose part of the Act—
The details have still to be worked out, but in his letter to me the Minister for Finance stated that, after the many representations by me to him and the Taoiseach, responsibility for looking after consumer interests in transaction charges should lie not with the Central Bank but with the Director of Consumer Affairs.
I suggest that the Deputy should not press his amendment and reenter it on Report Stage.
I accept that. It is important that the powers set out in the Central Bank Act are not diluted. Those powers would give the director authority to direct a bank or any other lending institution applying a service charge to refrain from imposing that charge or from changing that charge without prior approval and to publish information on any charges, terms and conditions. It is important that the director has the power to block any charge he feels is unfair and to instruct clear publication of this information in a way accessible to the consumer. This is not being done at present. I would not like the Director of Consumer Affairs to lose some of those relevant powers in the transposition of the powers from the Central Bank to him.
I met the banks two weeks ago and told them so. There had been enough about it in the papers. I met them and discussed the letter from the Minister for Finance. While they did not like it we had a civilised debate on which I reported on the last occasion. Henceforth, the transaction charges will be subject to approval by the Director of Consumer Affairs and will form part of his business. I welcome the strong line adopted by Deputy Richard Bruton on this also. We have our arguments here, outside and so on. Pushing my case, through my party, the Minister for Finance and the Taoiseach, took many months. Therefore it was good for me to be able to say that other parties were in agreement. Deputy Flood will be aware that it arose at our parliamentary party meetings on many occasions and that I received positive endorsement. It is good to observe that thrust which will more than encompass what Deputy Bruton suggested in his amendment.
When does the Minister propose to publish this?
I will have it when we resume in September. I presume we will be resuming in September.
Is that a Committee Stage amendment?
Yes, it is a section of the Bill.
Regarding our timetable, we may have passed that section. It may not be possible to amend it until Report Stage.
I accept the point the Chairman made.
I suggest that we should defer any consideration of it.
Both instances involve a new section.
Therefore, it should be dealt with more appropriately on Report Stage.
While appreciating the procedural difficulty it was put to us that we would be able to insert it in Part X — Miscellaneous.
Will the Minister have the text of her amendment ready by September?
Whenever we meet in September.
I am not by any means trying to rush the Bill through but the committee has other Bills with which to deal. I imagine it should be possible to introduce it on Report Stage rather than delay our consideration of this section.
That is a matter for the Chairman.
We can have a more thorough debate on Committee Stage, affording Deputy Bruton a much better chance. It seems that a new section can be inserted anywhere in the Bill. If it is more appropriate that it be ordered differently, the ordering can be done on Report Stage; different numbers can be applied on Report Stage.
I do not think there is any procedural conflict there.
If the Minister can include it in section 10 or at the end of the Bill on Committee Stage then Deputy Bruton can record his as an amendment to the amendment. In that way everyone would get a fair crack of the whip.
That is what I meant when I asked the Deputy whether he would be able to freeze his amendment, so to speak, and then reproduce it.
There is a procedure also that one can recommit an amendment on Report Stage, allowing the rules of Committee Stage debate to be applied.
The House then goes into Committee rather than into Report Stage.
That can last for an hour, and then one reverts to Report Stage.
It is important that it be introduced as a Committee Stage amendment as it would be a shame to have a section that did not receive appropriate consideration.
Deputy Bruton has pointed out the means by which the House recommit amendments, that there can be time set aside for that purpose.
I am sorry for holding up the business. Is there a time limit on that? That would be my only fear.
No.
Amendment, by leave, withdrawn.
We will discuss amendment No. 155. Amendment No. 156 is an alternative, No. 156a is related. With the agreement of the committee we might discuss these amendments together. Agreed.
I move amendment No. 155:
In page 33, subsection (1), line 30, to delete "this Act" and substitute "section 16".
This section provides, that where credit agreements do not comply with the requirements of certain sections of the Bill they shall not be enforceable by the creditor except where a court finds that the consumer has not been prejudiced and the failure to comply was not deliberate. This is also Deputy Bruton's intent in his amendment No. 156.
On amendments Nos. 155 and 156a, section 16 provides that credit agreements which do not comply with those terms of the Bill related to their content and completion requirement shall not be enforceable. It goes on to state that provided a court is satisfied that failure to comply was not deliberate and has not prejudiced the consumer.
We were advised that the amendment was necessary because an administrative or technical error could arise. That is also the purpose of Deputy Bruton's amendment.
My purpose would be slightly different. I would be reluctant to accept the Minister's amendment to delete "this Act" and substitute "section 16". As I read it, section 49 (1), as amended, would read:
A person shall not make a demand for payment or assert a present or prospective right to payment in respect of a credit agreement which is unenforceable by virtue of section 16.
If the Minister's amendment is accepted a very restricted number of instances only would arise in which loans would be unenforceable. The particular instances would be those of failing to comply with the terms of the contract.
The terms of the contract only.
So that we are really saying that a loan will be unenforceable only if it fails in providing correct terms in the contract. That is questionable because it permits enforceability for example, where a moneylender issued loans in breach of the terms of his licence, when he could impose a rate of interest in excess of that sanctioned in his licence. That would not be in breach of the terms per se of a credit agreement but nonetheless would be in breach of the terms of the licence.
What about the moneylending section? Is that not covered there? Did we not debate this previously?
What we have provided in section 16 is that certain types of credit agreements will not be enforceable. They include a number of things which would contravene the Act. We have decided that a moneylender would constitute one instance when one could not plead dispensing with the unenforceability. If one was a moneylender without a licence one could not make such a plea. Therefore, henceforth the only unenforceable loans will be those made by unlicensed moneylenders or those where the contract——
The terms of the contract.
——the terms of the contract were in breach of various provisions about information. However, we leave as enforceable loans where, for example a moneylender issued a loan in breach of the terms of his licence, by imposing a charge in excess of that permitted by the Director; for example, where a moneylender took a children's allowance book from a borrower, or other circumstances or practices being rendered effective criminal offences. Under this section we provide that the loan, notwithstanding that criminal offence or breaches of licence had occurred, would remain enforceable. This would mean that the consumer, although he experienced the trauma of appearing as a witness in a criminal case would end up having to pay all the former charges. The original provision, where there seemed to be a wider possibility of declaring loans unenforceable, was more welcome. The best protection for a consumer is that ultimately the loan is unenforceable. One of the problems under the old legislation was that consumers were very reluctant to come forward. Henceforth, if consumers discover that the terms of their loans are unenforceable, if there were breaches of licences or criminal offences, that would constitute an additional incentive for them to come forward. If the contract was robust and the credit institution had offered contracts within the terms of the Act, and if the credit institution then breached the terms of that contract, the loan might be unforceable. This provision is much more restrictive. The Minister is saying that if at the time the loan was first issued the contract was in conformity with this Act, then the loan is enforceable. If a lending institution breaches many of the terms of its contract——
Rather than section 16, is that what the Deputy is saying?
I am arguing that unenforceability of loans should apply to a wider list of cases than those listed in section 16 which are extremely limited. They do not cover breach of contract, breach of a licence or criminal offences that might be committed by lending institutions in the course of their business. My amendment was simply a housekeeping one, I was saying there is an ambiguity between sections 49 and 16 in that the court can set aside unenforceability but section 16 says that no person can initiate such a case to establish that the loan would be enforceable. It is ambiguous when one looks at section 49 to see who is supposed to initiate an action.
The unenforceability?
Yes, if a contract was flawed but not maliciously so. We are saying that the lending institution has the right to go to court to establish that.
Provided it was not——
It is not clear who can take those proceedings because section 49 states that a person shall not threaten to bring any legal proceedings. If it were the case that a lending institution has omitted some term, not maliciously, that person should be enabled to take legal proceedings. There is an inconsistency between sections 49 and 16 but there also is a more importunate issue of principle in that we are very much circumscribing the cases where loans will become unenforceable. They should be unenforceable if a lending institution commits a criminal offence, such as breaching its licence, in a way materially damaging to the consumer. These are clear cases where unenforceability would be eminently reasonable. We should pause a little before we proceed with the Minister's amendment.
If amendment No. 156 is not accepted, a loan might be interpreted as unenforceable even if that loan was from an illegal or unlicensed moneylender?
No, that is dealt with in section 82. If one is not the holder of a moneylender's licence, one is acting illegally and there can be no enforcement procedures on foot of money owed to an illegal moneylender.
An unlicensed moneylender.
An unlicensed one who is not registered with the director and paid his or her fee.
Have we made provision for——
That is dealt with in section 82. It is a feature of unenforceability that if one is not a licensed moneylender, one cannot take a person to court for failing to repay a loan because it should not have been lent in the first instance.
Has the person receiving the loan any recourse in an unlicensed case? In this section are we inadvertently giving free run to an unlicensed moneylender in that no case can be taken against him or her by the person getting that loan?
No, you cannot. We are not giving a free run to anyone; we are marking out clearly that there are licensed moneylenders who conduct their business properly. There are those who do not and they are the ones we intend to outlaw.
I am not clear on the distinction Deputy Bruton is making in regard to the amendment the Minister is proposing. Is Deputy Bruton looking for a wider remit?
I am saying that unenforceability of loans should apply to more instances than those set out in section 16 which sets out only two cases where a loan will be unenforceable; one is if it is by an unlicensed moneylender and the other is if the contract, at the time it was made, was in breach of this Act. There are clearly other instances where we would want a court to be able to say a loan is unenforceable, for example, if a moneylender breached the terms of his licence, committed a criminal offence in taking children's allowance books or if a moneylender or a lending institution breached the terms of the contract solemnly entered into. In such circumstances I would have thought the court should have the ability to overturn those loans and say they are unenforceable. An action can be taken under section 48 if the term is unfair or unreasonable in the original contract but there are many other cases where someone breaches the contract and there is no enforceability. We should provide for the wider cases where loans become unenforceable without the consumer having to go to the expense of mounting a legal challenge and even in those circumstances he does not have grounds for doing so if we do not provide for unenforceability. The consumer may have had his or her children's allowance book taken but we are not allowing that to be grounds for unenforceability.
The Deputy is saying that the terms within section 16, which is the only one dealing with unenforceability are two narrow and he is seeking to bring the whole Act——
Not necessarily the whole Act but extract certain provisions——
Extract certain parts of the Act and render them subject to the conditions of section 16? Is that what the Deputy is saying? The Act is too wide so that is why we were seeking to delete this. The whole Act would not be subject to enforceability. The Deputy is saying that by deleting this Act and substituting it for section 16, it is rendering it too narrow. I am not convinced, we would then have to list other items in section 16.
There would be some procedure such as examining certain types of breach of contract. If a moneylender issued loans with a charge in excess of what had been permitted by the Director of Consumer Affairs, there would be a question mark about the enforceability of such a loan. I have not thought through all the instances that one might wish to include but I am not happy with the Minister's amendment.
I am not happy with it either having had this discussion. I believe the better option is to put more specifics into section 16, the section dealing with unenforceability.
What would happen if a moneylender made threats about the repayment of a loan?
That is covered.
It does not make the loan unenforceable; it would be a criminal offence.
It is a criminal offence.
Should there be a point at which that is not the normal procedure?
That is covered in the section.
Taking a person's pension book should make a loan unenforceable and there should be a provision in the Bill to cater for that.
I will expand section 16 while retaining it as the unenforceability section.
Do I take it that amendments Nos. 155 and 156, which is an alternative, and No. 156a which is related are withdrawn? Amendments Nos. 155 and 156a are in the name of the Minister and amendment No. 156 is in the name of Deputy Bruton. They are withdrawn on the understanding that section 16 will be expanded on Report Stage.
Is the Minister saying that she is going to move amendment No. 155 but amend section 16 on Report Stage?
That is correct.
Amendment agreed to.
My amendment, No. 156, was——
We agreed to accept the Minister's amendment so the Deputy cannot move his amendment.
It is too broad.
It becomes impossible to interpret. My point is that under section 49 it is not clear who initiates legal proceedings if a contract was flawed but not maliciously so.
Due to an administrative or technical error.
As things now stand the courts could rule that the loan would still be enforceable but it is not clear who would take the proceedings to initate that in the court. Section 49 states that a person could not threaten to bring such proceedings. It is ambiguous. I am not sure how the procedures are supposed to work. How do people establish the enforceability of section 16 if they cannot threaten to bring legal proceedings?
I will try to have that dealt with when we return to section 16 on Report Stage.
Amendment No. 156 not moved.
I move amendment No. 156a:
In page 33, subsection (2), line 32, to delete "this Act" and substitute "section 16".
Amendment agreed to.
I move amendment No. 157:
In page 33, lines 38 to 40, to delete subsection (3) and substitute the following:
"(3) In any proceedings for an offence under this section, it shall be a defence for the accused to show that he had reasonable cause to believe——
(a) that there was a right to payment, or
(b) that any failure to comply with the requirement of the Act as to form and content of an agreement was not deliberate, and that any such failure has not materially prejudiced the consumer.".
Amendment No. 157 has been taken into consideration by the Minister's amendment. I am not 100 per cent sure whether with the expansion of section 16 the danger Deputy Quill adverts to in all intentional breaches is covered. I would withdraw the amendment if the Minister could reassure me on that point.
The content of Deputy Quill's amendment is already provided for in the earlier amendments to section 16. There will be an opportunity on Report Stage for further debate on the matter. The contents of the amendment Deputy Quill proposed are already provided for in amendments Nos. 155 and 156. Before we had this discussion my study with officials led us to believe that there was no need for that if the others were accepted.
There is uncertainty in relation to section 16, etc., and since the Minister is coming back with it I will withdraw the amendment and have another look at it.
Amendment, by leave, withdrawn.
Section 49, as amended, agreed to.