I propose to take Questions Nos. 14, 18, 21, 35, 64, 66, 67, 72 and 89 together.
The Money Advice and Budgeting Service (MABS) provides assistance to people who are over-indebted and need help and advice in coping with debt problems. There are 52 independent companies nation-wide operating the service. The credit union movement has been a key partner in MABS since its inception and their involvement and support is central to the development and success of the service. Other voluntary and statutory bodies, such as the Society of St. Vincent de Paul, the Community Welfare Service, Citizens Information Centres, Centres for the Unemployed and local authorities work closely with the programme.
In 2001 MABS dealt with some 9,000 new clients. In 2006, it provided services to some 12,500 new clients and the number of active cases at the end of the year was some 14,900. The growth in demand for the service can be attributed to the increase in the availability of credit generally and to the quality of the service provided by MABS advisors.
In 2006, €16.4 million was provided to fund the service and in 2007 I have further increased the annual allocation to €17.67 million to assist the MABS in dealing with its workload.
The issues that give rise to problems of over-indebtedness for people are highly complex. The cost and availability of credit for people on low incomes and the barriers they face in accessing mainstream and cheap forms of credit add to the difficulties these people encounter in managing their finances. I am particularly concerned about the unacceptably high level of interest rates currently being charged by some financial institutions, loan companies and by legal moneylenders in situations where people have no alternative sources of credit available to them.
I have held discussions with a number of groups including the Irish League of Credit Unions, the Irish Bankers Federation and the Financial Regulator about these issues. The outcome of these consultations, the Combat Poverty Report, ‘Financial Exclusion in Ireland — An Exploratory Study and Policy Review' commissioned by the Financial Regulator, together with the statistical data now emerging from the new MABSIS information system will make a significant contribution to our knowledge about the problems of debt in Ireland. They will inform the strategies that need to be put in place by both Government and the providers of payment services such as the Banks and Credit unions to promote greater financial inclusion in Ireland.
I plan to bring proposals to the Government shortly to establish the MABS on a statutory basis. My proposals for legislation will build on the best features of the MABS model of service to the public and will include measures to address concerns about excessive loan charges for people on low incomes. The proposals will combine a continuation of local voluntary involvement with strong national leadership and ensure a high quality, coordinated budgeting and advice service for the future, in particular for people on low incomes. The proposals for the new legislation will take account of the significant developments which have taken place in MABS since the previous Bill was published in 2002.
The proposals entail a number of specific actions to address some of the issues that leave people on low incomes vulnerable to high cost credit charges. While the regulation of money lending comes under the Consumer Credit Act, 1995 and the licensing of moneylenders is a statutory responsibility of the Financial Regulator, my view is that the MABS has a key role to play in informing the licensing process in these circumstances. Officials of my Department are working closely with the Financial Regulator and with the Department of Finance on the detailed legislative provisions required to give MABS an input into these matters.
This work is nearing completion and I plan to bring the proposals to Government shortly. They will be informed by the consultations I have had with a range of individuals as well as the expert views of key MABS interests including money advisors, MABS voluntary boards of management and other stakeholders such as the credit union movement. The new legislation will take account of best practice in corporate governance for a customer focused service that provides value for money for the taxpayers investment and meets the challenges posed by the rapidly changing face of debt in 21st century Ireland.