Dan Neville
Question:126 Mr. Neville asked the Minister for Social and Family Affairs the numbers using MABS. [23392/04]
View answerWednesday, 6 October 2004
Questions (16)
Oral answers (7 contributions)
In 2003 the Money Advice and Budgeting Service took on approximately 16,000 new clients and had more than 13,000 active cases at any one time. The number of new clients increased from 9,000 in 2001 and 12,000 in 2002. An average of 1,700 persons per month visit the MABS website www.mabs.ie. The key feature of the MABS programme is the provision of money advice, including the publication of information on money management and debt counselling. The service is targeted primarily at individuals and families who have problems with debt or money-lending and who are on low income or in receipt of social welfare payments.
The Money Advice and Budgeting Service helps to negotiate voluntary arrangements as an alternative to the legal system. This approach is generally well received by creditors but in some instances, especially when MABS is not involved, creditors will use the legal system to enforce the debt. MABS now operates from 65 centres throughout the country, with 130 money advisers and 80 administrative staff working for it. It has an emphasis on practical, budget-based measures that will succeed in removing people permanently from dependence on moneylenders and open alternative sources of credit through the credit unions. The service gives advice and assistance but does not pay debts. MABS will cost more than €11 million to run in 2004.
An option offered by MABS is to arrange for the person to open a special account in his or her local credit union. This enables persons to repay debts by paying an agreed weekly amount into this account. A shares account is also opened which helps to cultivate a savings habit and enables people to borrow in time of need.
Additional information
Currently the Money Advice and Budgeting Service and the Irish Bankers' Federation operate a debt settlement scheme on a pilot basis as an alternative to the legal system of debt enforcement. This pilot is targeted at those who are on the point of legal action with their creditor or creditors and consists of a voluntary agreement between debtor and creditors which provides for income retention, freezing of interest and writing off of residual debt after a repayment period of up to five years. A new company, MABS National Development Limited, was established this year and will promote and develop MABS services throughout the country.
A recent evaluation found that over 90% of those questioned were positively disposed towards the service, and this included clients, community and voluntary bodies, the finance industry and statutory creditors. It found that two thirds of the caseload consisted of female clients. Just over half were aged between 25 and 44 and one third were aged over 45, with a small proportion aged under 25. Approximately 70% were receiving some form of social welfare payment. The overall conclusion was that the MABS has proven itself a worthwhile intervention with a strong rationale for its continuation.
At the time of the savage 16 cutbacks last year, if some family or individual was in difficulty, MABS, often in conjunction with the health boards, worked out the difficulty, advised the family or individual to go to credit unions and made arrangements with the relevant bank, building society or other financial institution. An agreement was entered into that the family or individual would pay a portion of the debt, the institution would reduce its claim for interest and, most importantly, when the person had entered into agreement with MABS and the health board, the health board would make a part payment. One of the savage 16 cutbacks last year stopped this and I ask the Minister to reverse this decision. Community welfare officers have told me it is having a significant effect on those attending MABS.
Financial institutions give money to those who cannot afford to pay them back. Some 1,600 people were in jail last year for non-payment of television licence fees and non-payment of debts to financial institutions. Legislation should be introduced so that financial institutions will be prosecuted if they give money to those who cannot afford to pay it back. It works both ways.
I will reconsider the 16 or 17 adjustments to satisfy myself as to where they stand, including the one to which the Deputy refers, but I stress that this involves no commitment. I have asked for the relevant files and in particular for an assessment of whether hardship is involved. In many cases, those involved at the time, such as the social partners and others, felt the adjustments were unfair but have now come to the view that they have not caused hardship. However, in other cases perhaps they have and I will take a positive view of these cases.
The Deputy will agree that MABS provides a good service. It is there to help people in particular circumstances and we will work with the service to help improve it.
The service was established in 1992 with five pilot projects but now has over 50 offices with funding of €11.4 million. However, the cut to the MABS supplement is insidious and I ask the Minister to review it. It provided a financial safety net and took people out of the hands of moneylenders and other sharks who created huge difficulties.
Will the Government follow through on its commitment to set up MABS as a statutory authority? This was agreed in principle and a Bill was drafted but has been deferred pending further discussion. Will the Minister ensure that some aspects of local input currently facilitated by boards of management are retained as it has been positive in effect?
We spoke to MABS and the free legal aid centre with regard to the other issue. Will the Minister ask the Department of Justice, Equality and Law Reform to explore debt settlement legislation which would impose duties and obligations on financial institutions to ensure they are not handing out money and credit cards freely while expecting everybody else to pick up the tab? They put pressure on vulnerable people with free mail shots while expecting the Government to supply additional funding in this regard. Debt settlement legislation would be important and complementary to the ongoing tremendous work of MABS. Long may it continue.
I assume the Deputy refers to the MABS National Development Limited company which was incorporated on 18 March 2004 and for which a team has been recruited, which commenced employment on 1 September. It is a new company to further develop the MABS service. Its aim is to identify and assess the needs of management and staff in MABS at local, regional and national level. The directors of the new company are all stakeholders in MABS, representing management and staff interests from the service. Comhairle is also represented. The Department is represented by the national co-ordinator for MABS to whom the company employees report on a day-to-day basis. A company secretary has also been appointed.
I will pass on to the Minister for Justice, Equality and Law Reform the Deputy's query in regard to debt settlement legislation.
I record my appreciation of the work of MABS in the community. From a small beginning in Cork ten years ago, where the late Mr. Brendan Roche was the first chairman, the service has come a long way and has done tremendous work, most of it unseen and sensitively handled. However, the service is not widely known throughout the community. The Minister should communicate to MABS that greater awareness is needed as well as a campaign to make people aware that the service is there for their assistance. While 2003 showed an increase of 9,000 users, many others would avail of this assistance if they were aware it was available. I congratulate the Minister on his appointment and know he will do an excellent job. He should communicate with MABS that greater awareness of its services is needed in communities that do not have the service.
I agree with the Deputy's comments regarding MABS and will do what he suggests.