I welcome the publication of this Private Members' Bill and I congratulate Deputy Flanagan on the work he has done on it. It is worthy of support. Deputy Pat Rabbitte summed up the basis of the Bill last night when he stated that this is a growth industry for the times in which we live. People find themselves indebted for whatever reason and in some cases they are extremely vulnerable, stressed and unable to discharge debts, not because of recklessness on their part but because of the economic circumstances in which they find themselves. Only a small number of debtors plunged themselves knowingly and recklessly into these circumstances. In so far as recklessness is involved, it is not merely on the side of the consumer, but is frequently shared by the lender where moneys are recklessly lent in circumstances where questions might reasonably have been raised about ability to repay. Honest, decent, law abiding citizens find themselves in these circumstances, and one has heard the case being made that they are being subjected to debt collection methods of which the House could not approve.
It is important to speak about the culture surrounding instances where people find themselves subjected to inordinate amounts of debt. It has been stated previously that the level of financial literacy in this country still leaves a lot to be desired. If I look at the socio-economic group that finds itself largely at the mercy of debt collectors, I note they are invariably persons who may not have a degree of financial literacy that would pervade throughout all of the socio-economic strata. In 1997, the OECD conducted an international audit literacy survey. It found that 25% of Irish adults have difficulties with simple everyday numeracy and literacy tasks, such as adding up a bill, understanding a payslip or filling in a building society form. The National Adult Literacy Association and MABS have done much work in this regard, but it is important that if this Bill is taken on board, we should look at the overall context of people getting themselves into increasing debt. A proportion of those people will find themselves in that situation because they may not have read the fine print.
It should be acknowledged that IFSRA has done much work in making the language of financial services much clearer for people, and the campaign for plain English has achieved much in that respect. However, there are people who are still getting into debt, either through debt collection agencies or debt collectors, and a portion of that is due to an inability to understand the process on which they embarked in the first instance. That must be borne in mind.
When it comes to the issuance of a licence for the purposes of undertaking debt collection, it is important that something is built into the legislation that protects the consumer. The licence holder should be made take cognisance of a certain set of criteria. Although they are not dealt with specifically within the legislation, perhaps they could be dealt with in section 5 and section 6. Where debt is being collected, it should be collected where there is an assignment of wages. This is referred to in the Bill. There must be safeguards to prevent an assignment of wages from adversely affecting the debtor's ability to maintain a basic standard of living for themselves and their family. In particular, the level of an assignment should not undermine the debtor's access to the basics such as food, clothing, housing and basic utilities, so there is a social inclusion component built into the Bill in order for people to have their basic rights.
There also needs to be more regulation of the costs of debt collection in order to protect the debtor and his or her family. There are often penalty charges for late payment built into debt, and the interest payments on that alone are significant and sometimes can be a multiple of the original debt. That is something that should be examined.
In welcoming the Bill, we also need to look at whether or not there is a basic EU model. Deputy Rabbitte stated last night that there does not appear to be a regulatory framework for debt collectors across the EU. My research tells me that there is no such framework but I am open to correction on that. We need to have some kind of overarching regulation of debt collection, so that every citizen knows his or her rights and entitlements. There should be an effective right of redress in the Bill for the debtor in respect of harassment, excess debt recovery costs and the wrongful removal of goods. If a regulator is empowered to look at this issue, there should be some framework to give a right of redress to the debtor. If we look at the nature of most unregulated debt, it is very often at the hands of moneylenders. It remains a difficulty as to how we can regulate moneylenders who operate in the black market, but for those who are incorporated and are collecting debt, then harassment issues should allow for a certain right of redress on the part of the debtor where actions are proven to be excessive.
The defaulting consumer should have a statutory right to be advised on who is authorised to collect the debt so that there is complete transparency in the process. It could be argued that the use of multiple debt collection agencies to collect debts simultaneously should be prohibited. We dealt with the Fines Bill last week in the House. We are witnessing a sea change in Government thinking, so that we are trying to keep people out of prison and facilitate them by allowing for payment of fines by instalment. That is to be welcomed. It could be argued that a similar type of facility should exist for people who find themselves in debt; they should not be subjected to the same offences.