Dáil Éireann díospóireacht -
Thursday, 22 Nov 1990

Vol. 402 No. 10

Ceisteanna — Questions. Oral Answers. - Moneylending.

Michael Bell

Ceist:

14 Mr. Bell asked the Minister for Social Welfare , with reference to his statement of 21 November 1988 regarding the action plan on moneylending and having regard to the Combat Poverty Report Moneylending and Low Income Families, if he will outline the action he has taken on moneylending since November 1988 with particular reference to (a) the provision of finance (b) his discussions with the Society of St. Vincent de Paul and the Irish League of Credit Unions (c) the outcome of the review of debt clearance by public utilities such as the ESB and Bord Gáis Éireann (d) the publication and distribution of leaflets (e) the provision of a money advice service nationwide (f) discussions with the Minister for Education on the provision of a module on money management in first and second level schools; if he will make a general statement on his discussions with the Ministers for Industry and Commerce and Justice, on amending the Moneylenders Acts, 1900 and 1933 so as to curb this problem; and when the Oireachtas will have legislation placed before it for consideration.

Dr. Woods

A central objective of the Government's action plan on moneylending was achieved with the establishment of the loan guarantee fund. The recommendations for the operation of this fund were presented to me in November 1989 by the supervisory committee which I appointed to examine this matter following the publication of the action plan.

The fund is financed by an allocation of £100,000 from the Government drawn from national lottery funds and by a contribution of £100,000 from the Irish Banks Standing Committee. The Society of St. Vincent de Paul are responsible for the day-to-day administration of the fund which has been operative since April of this year. The co-operation of the credit union movement in making loans which are guaranteed by the fund is an important element of its operation.

The fund has already been used by the society to assist over 430 people in obtaining loans through credit unions. The society's debt advisory clinic and local conferences are also active in providing money advice and directing clients toward the low cost credit available through credit union membership.

The society have also set up a debt advisory clinic at their headquarters which deals with about ten cases per week. A similar arrangement operates around the country where task forces have been established to develop the use of the fund at local level. The society have also developed good working relationships with financial institutions and legal moneylenders. I am confident that these arrangements are having a significant impact in breaking the debt cycle affecting many families by providing a service at local level targeted at those most at risk.

The issue of general information material will be considered in consultation with the society as the particular needs of clients are identified through the experience gained in the administration of the scheme. The review of debt clearance arrangements with public utility companies will be undertaken in this context.

All aspects of the Moneylenders Acts, 1900 and 1933, are being examined at present by the Department of Industry and Commerce, in conjunction with the Department of Justice, in the context of implementing the EC Directive on Consumer Credit.

Mr. Stagg

I thank the Minister for his reply. Could he not indicate more clearly, given that he made a statement in 1988 that he was having discussions with the Minister for Justice concerning the amendment of the Moneylenders Acts, when we might expect the amendments from the Government in that regard? Would the Minister not agree that the reason for the thriving trade in loan-sharking, both legal and illegal, arises from the inadequate payments from his Department? The 430 families referred to by the Minister who have been assisted by the window-dressing scheme he has introduced is simply the tip of the iceberg. There is no attempt to deal with the reality of the matter.

An Ceann Comhairle

This is a very long question, Deputy.

Mr. Stagg

It was a very long answer. Could the Minister state his opinion on the level of legal interest rates being charged by what I would describe as loan sharks, at 729 per cent——

An Ceann Comhairle

I would dissuade the Deputy from making a speech.

Dr. Woods

The point the Deputy referred to relates to a case which is before the courts at the moment and is mentioned in the papers today — that is how the Deputy has come up with that figure. I would point out to the Deputy that this is an action taken by the Department of Social Welfare against a moneylender——

Mr. Stagg

One moneylender.

Dr. Woods

The Department of Social Welfare are pursuing the matter. I will explain to the Deputy as would anyone in the credit union how difficult it is to bring these people to court. In relation to the other wide-ranging statements made by the Deputy, he will gradually become familiar, in his new position as spokesman, with the fact that the Government have greatly increased the rates of payment to those who depend on social welfare — far more than any increase given in the period in which the Deputy's party were in Government.

I would also point out to the Deputy that in August-September we introduced a special back to school payment. The Society of St. Vincent De Paul have pointed out clearly that that had a major impact on moneylenders at that time, as indeed will the £25.6 million the Government have allocated for the Christmas bonus, to be paid in the first week in December. That will also assist in offsetting those problems. The Deputy can be assured that as far as this Department are concerned, we are taking the matter very seriously. The Deputy said that the 430 families represent only the tip of the iceberg. The reason the number is so small is that many people have been set up with loans without needing a guarantee. The whole system is much more effective than appears from the cases which need a guarantee. In relation to the legislation, the reply I gave dealt with that.