Tuesday, 27 May 2014

Questions (89, 141)

Finian McGrath

Question:

89. Deputy Finian McGrath asked the Minister for Finance if his attention has been drawn to the fact that a number of financial advisers have left the debt advice business over the application process to the regulator; and his views on the concerns of the Professional Insurance Brokers Association Ltd; and if he will make a statement on the matter. [22287/14]

View answer

Charlie McConalogue

Question:

141. Deputy Charlie McConalogue asked the Minister for Finance his plans to address the concerns of the Professional Insurance Brokers Association (details supplied); and if he will make a statement on the matter. [22961/14]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 89 and 141 together.

The Central Bank (Supervision and Enforcement) Act 2013 amended the Central Bank Act 1997 to introduce a regulatory regime for debt management firms. The Central Bank is responsible for the authorisation and supervision of such firms.

I am informed that the Central Bank issued a consultation paper on 1 August 2013 in respect of the proposed regulatory regime to apply to debt management firms.  The proposals set out a robust set of requirements for what is an important sector, particularly for the clients of debt management firms, many of whom are vulnerable and struggling to manage their financial commitments and seek advice and assistance from such firms. 

Following consideration of the submissions received from interested parties, including the PIBA, the Central Bank issued a feedback statement in October 2013 confirming that a number of revisions were being made to the proposed requirements. These revisions were made to ensure that the requirements reflected more clearly a proportionate approach based on the nature, scale and complexity of firms' activities, while ensuring an adequate level of protection for consumers who avail of the services of such firms. 

I am informed that an applicant seeking authorisation as a debt management firm must satisfy the Central Bank that it is able to  fulfil correctly and properly the obligations imposed on holders of such an authorisation.  In fulfilling its statutory role in this regard, the Central Bank adopts a robust and risk based approach to the authorisation process for debt management firms.   The authorisation process requires applicants to be of good repute and to have the appropriate experience and competence.  It also includes prudential requirements aimed at protecting consumers by ensuring debt management firms have appropriate structures and controls in place.  The Central Bank considers that the requirements applied are not onerous but must be demonstrated by applicants in full prior to an authorisation being granted.

The Central Bank is currently processing the applications for authorisation it has received and has authorised 20 debt management firms to date.  It is a matter for each firm to determine whether it wishes to seek authorisation to continue to provide services as a debt management firm.  The Central Bank has informed me that some firms have determined that, as their debt management activities constitute such a small portion of their business, they do not wish to proceed with their application to seek authorisation.

As the Deputy is aware, the Money Advice & Budgeting Service  offers a free, confidential and independent service for people in debt, or in danger of getting into debt.