I welcome the Minister, Deputy Shatter, to the House.
Criminal Justice (Unlicenced Money-Lending) Bill 2013 [Seanad]: Second Stage
I move: "That the Bill be now read a Second Time."
I thank the Minister for taking the time to come into the House. As he is no doubt aware, illegal moneylending is an increasing scourge on our society. Unfortunately, the crime figures do not bear that out because, as the Minister is all too aware, there has never been a conviction for illegal moneylending in Ireland. There is a great deal of law governing this area but, unfortunately, its victims are not sufficiently protected in terms of coming forward and giving evidence against the accused when the accused, or agents of same, is likely to be in a position to intimidate them on their way out of the courthouse or elsewhere.
In terms of legislation, unlicensed moneylending is mentioned in the Consumer Credit Act. The penalties include up to five years imprisonment as well as fines. The offences perpetrated in terms of the criminality involved and the methods of collection these people use are governed under sections 10 and 11 of the Non-Fatal Offences Against the Person Act and the Criminal Justice (Public Order) Act 1994. While there have been many convictions under those sections of those Bills, it is not possible to say specifically the crimes to which they were related, although it is certain, from the Minister's responses to parliamentary questions in the other House, that there have not been any convictions for this particular crime.
The situation is exacerbated in a recession where there is a need for social finance in our new regulatory regime. People are being forced in the first instance into the hands of Provident plc and other such lending institutions which, strangely, can legally charge up to 200% and employ questionable methods of collection activities in terms of the persistence with which they contact people and so on. They are the lender of last resort in terms of officialdom, and when people cannot make those payments, they are forced into the hands of the illegal moneylenders. Many of them are involved in serious criminality throughout the country, including intimidation and violence and in terms of the persistence with which they threaten people and vary the principal people owe rather than simply applying interest rates, however high they may be.
It also seems from discussions with gardaí, community groups and those trying to prevent this particular crime that the perpetrators are well-known but we do not have the evidence to convict them. The victims are people preparing for children to go back to school or those with the expense of a first holy communion, a family wedding, schoolbooks, children going to college, an electricity bill or simply putting food on the table. As we know anecdotally from our clinics these are real problems people have on a daily basis. They go to these moneylenders and then suffer serious consequences.
I must mention Communities Against Illegal Lending of Money, CAILM, in Sligo which has done significant work on creating awareness on the issue and encouraging alternatives such as community banks where people save over a period of time. Cranmore, which is a large estate in Sligo, has the Cranmore community bank which works very well. CAILM takes a three tiered approach encompassing prevention, alternatives and enforcement. It also educates through telling people where they can go for social finance. We are falling down when it comes to enforcement. I am aware of two cases in the north west where files were sent to the DPP but, as with many other cases, the victims did not come forward as they did not have enough confidence in the system to protect them. On summary conviction one faces quite a small fine and or a maximum prison sentence of 12 months. I do not believe any cases have been heard on indictment but in such a case the maximum sentence is five years in prison.
The Bill offers a very small spoke in the wheel to deal with these issues. It will give additional protection to people whereby on conviction the court can hand down an order to prohibit the perpetrator and his or her agents contacting by any means the victim in an effort to get away from the intimidation and give people confidence. The Bill also states if there is not enough evidence to convict but the judge is satisfied there is a clear issue of intimidation an order to prohibit contact can be handed down. This is to encourage people to come forward so these moneylenders can be convicted by providing safeguards which do not exist at present. While illegal moneylending and violence against an individual are crimes, in practice the victims of this particular crime fall between two stools. This is a small advancement. It is non-adversarial and could be embraced by the Government.
The tradition, certainly for members of Fianna Fáil, is that Private Members' motions do not tend to be accepted, for no other reason than they are Fianna Fáil motions. The Independent Senators enjoy better success in this regard, as it seems more palatable for the Government of the day to accept their Bills on Second Stage. This is not a criticism exclusively of the current Government nor is it an absolution for previous governments which had the same practice. I very much hope in the interests of groups such as CAILM - Senator O'Keeffe is well aware of its work and supports it - that we take steps in this area. It is incumbent on us to do so.
Moneylenders prey on society and those who are at their most vulnerable, who are unemployed, have no money and have exhausted all avenues, perhaps including social welfare. In the regulatory regime we now have it is increasingly difficult for credit unions to make social finance available. The Bill is small, and other supplementary measures would be required with regard to the delivery of social finance. We must examine the models in the UK where its Assets Recovery Agency, Department for Work and Pensions and other agencies have come together to successfully secure approximately 100 convictions in recent years for this particular crime.
The Bill provides for a prison sentence of 14 years, which is a significant increase on the five year sentence which exists at present because it is not a deterrent to criminals. As I have stated, there have been no convictions and I do not believe there will be until we can demonstrably afford additional protection to victims. We humbly believe this is a step in this direction and we very much hope the Minister will be in a position to accept it on Second Stage and add the benefit of his party and the coalition's brilliance to enhance it further on Committee Stage.
This issue is predominantly urban. Sligo is not unique and large urban centres throughout the country such as Limerick and Dublin have been affected by this crime. I very much hope we can extend some element of hope to the victims of this crime and to society by taking this step to provide them with additional protection to ensure they are encouraged to come forward and testify against these criminals.
I pay tribute and thank councillor Deirdre Heney, who was very much involved in helping to draw up the legislation and in researching the existing legislation which governs this area. The figures speak for themselves as we have had no convictions. There is much law but no justice. We believe this is but one small spoke in a wheel of many spokes to assist in this area. I very much hope the Minister will be able to embrace this legislative initiative in the spirit with which it has been tabled.
I support the constructive legislation put together by my colleague, Senator Marc MacSharry. It is not the first time he has done so. He has outlined many of the reasons the Bill should be accepted. As my colleague stated, it is part of a solution and not the be all and end all. It will not solve everything. One of the biggest issues with regard to illegal moneylending is with regard to the tactics used by some moneylenders to threaten people into paying exorbitant rates of interest. They use physical assault, seize goods, break into property and verbally threaten.
The problem is increasing in these very straitened times. We are in the middle of a very deep recession and people cannot obtain finance from banks or credit unions, social welfare payments have been cut drastically and the Government has abolished payments such as communion and confirmation grants. Many vulnerable and poor families who do not have resources fall into the arms of moneylenders when it comes to communion and confirmation. The Bill would provide protection for someone who made a complaint to the Garda. At the very least even if there was not enough evidence to convict someone a judge could put in place a barring order to prevent an individual or his or her agents from threatening or making contact with the person who owes him or her money. The Bill is part of the solution and the Government should accept it on Second Stage and allow amendment should it be required.
We intend to bring forward further legislation on legal moneylenders. We do not have a maximum APR set by the Central Bank. One company in particular, which I will not mention, offers a €500 loan repayable over 52 weeks at a payment rate of €15 a week. Somebody who may not be too financially competent might think this is reasonable, but it is an APR of approximately 160%. People prey on the vulnerable and desperate and those who are not up to speed on finance.
At least those moneylenders are legal, but illegal moneylending generally emanates from organised crime, dissident groups and drug dealers, people who are dangerous in their own right. Senator MacSharry's Bill would provide protection and increase the maximum penalty to 14 years in prison. Under it, a judge could instruct an individual or his or her agents not to make further contact with a person. This is a sensible approach and I am interested in the Minister's response.
I would be also interested to know whether his Department or the Department of Finance plans to tackle moneylending in general. A part of the legislation that we intend to introduce will deal with the advertising of legal moneylenders. They run promotions such as no credit checks, guaranteed loans, borrow up to €500 instantly, etc. These adverts are prevalent on British television and are creeping into this country at an alarming rate. Were this Bill accepted, it would form part of the solution and lay down a marker that the Government was willing to do something about the issue.
This is not an easy matter and one size does not fit all. People's social welfare payments have been cut and they cannot access finance through normal channels because their banks will not lend to them if their credit cards are maxed out. Generally, it is family events such as communions, confirmations and weddings that prompt them to try to get their hands on €500. They do not realise how much they will repay. More importantly, they do not have the protection of the courts. As Senator MacSharry stated, there have been no convictions under the current legislation. This Bill would make it easier for the courts to set down a barring order. It might be a start to the process. I hope the Minister sees fit to allow the Bill to pass Second Stage and to accept it in the manner in which it has been proposed. It is constructive, well thought out legislation.
I would like, at the outset, to express my appreciation to Senator MacSharry for publishing the Criminal Justice (Unlicensed Money-Lending) Bill 2013. The Senator has, through this Bill, put on the agenda once more the important issue of illegal moneylending.
Responsibility for legislation on the regulation of moneylending and the prohibition of illegal moneylending lies with the Ministers for Finance and Jobs, Enterprise and Innovation, respectively. Comprehensive legislation targeting the illegal lending of money has been on the Statute Book for some time and has, indeed, been strengthened in recent years. Licensed moneylenders operate under the regulatory control of the Financial Regulator, who can impose "administrative sanctions" against moneylenders licensed by him for prescribed contraventions of legislation or regulatory rules.
The focus of today's debate is illegal moneylending, which is addressed by section 98 of the Consumer Credit Act 1995. This prohibits any person from engaging in the business of moneylending without a licence. Acting as an agent of an unlicensed moneylender is also prohibited.
A member of the Garda Síochána has considerable powers under the Act where he or she has reasonable cause to suspect that a person is engaging in the business of unlicensed moneylending. The member may, without warrant, stop, question, search - if need be by force - and remove from that person any document or money which the member reasonably believes may be in that person's possession for the purpose of moneylending. It is an offence to obstruct or interfere with a member of the Garda Síochána using those powers. It is also an offence to give a garda information which is false or misleading or to fail to comply with any request made by a garda using those powers.
The primary offence of engaging in unlicensed moneylending is indictable and it is noteworthy that legislation brought forward by the then Department of Enterprise, Trade and Innovation, namely, the Investment Funds, Companies and Miscellaneous Provisions Act 2005, increased the penalties for the offence to a fine not exceeding €100,000, imprisonment for a term not exceeding five years or both. In addition, the offence of demanding money with menaces under section 17 of the Criminal Justice (Public Order) Act 1994 already carries a penalty of up to 14 years imprisonment.
As the Minister for Justice and Equality, I share the Senator's concern for persons who fall victim to those unscrupulous individuals who would prey on their fellow citizens through illegal moneylending. I think the House will agree, however, that the powers granted to the Garda to address the problem, and, indeed, the penalties available to the Judiciary in this regard, are considerable. In that regard, the provisions of this Bill would not in fact create any new power or penalty. The Bill effectively replicates offences which are already on the Statute Book.
The provision in section 2 of the Bill, which proposes making an offence of "extortion, demanding money with menaces and unlicensed money-lending", replicates and merges the separate offences already contained in the Criminal Justice (Public Order) Act 1994 and the Consumer Credit Act 1995. The Criminal Justice (Public Order) Act 1994, section 17, provides for the offence of blackmail, extortion and demanding money with menaces. This section already provides that it is an offence for any person who, with a view to gain for himself, herself or others or with intent to cause loss to another, makes any unwarranted demand with menaces. The Consumer Credit Act 1995, section 98, provides for the prohibition on engaging in business of moneylending without a licence, as previously mentioned. This section already provides that a person shall not engage in the business of moneylending on his or her own behalf unless the person is the holder of a moneylender's licence and maintains a business premises for that purpose.
However, whereas the existing legislation provides clarity in dealing separately with these two very separate and distinct offences, the proposed Bill would, in my view, create confusion by effectively merging these two separate offences. Furthermore, the penalties proposed in the Bill are equivalent to the existing penalties already imposed for the relevant offence under the 1994 Act. This already carries a penalty of up to 14 years on indictment, the penalty that Senator MacSharry made reference to in his Bill.
In addition, the law already provides in the Criminal Justice Act 2007, section 26, that a court may make a monitoring and protection order to protect a victim of an offence from harassment by the offender. This provision can be made by a court in regard to the offence of demanding money with menaces, as defined by section 17 of the 1994 Act. A court may also make an order protecting a person from harassment under section 10 of the Non-Fatal Offences Against the Person Act 1997, even where the court finds that the alleged offender is not guilty of an offence. This is identical to the provision in section 2(5) of the Bill.
For these reasons, the Bill would not provide our courts and An Garda Síochána with any power they do not already have under existing legislation. The Bill would therefore have no legal effect other than to make the law less effective and more obscure by blurring the distinction between the separate offences of illegal moneylending and demanding money with menaces. This would, in my view, not be appropriate.
I think we are all aware as public representatives of the damage that illegal moneylenders can cause in people's lives. Typically, they prey on the most vulnerable and disadvantaged people in our communities and charge extortionate interest rates for money lent. Rates in excess of 100% are by no means unusual. Prosecuting people for the offence is very difficult - that I acknowledge - because the loans are informal and undocumented and the vulnerable victims often live in terror of the moneylender, so they are typically extremely reluctant to make formal complaint about the offender. I have been advised by the Garda authorities that, where offences under section 98 are disclosed and are reported to An Garda Síochána, the matter will be the subject of investigation under the direction of the local district officer, with relevant expert assistance available from the Garda Bureau of Fraud Investigation. I would encourage those who have information concerning the operation of unlicensed moneylenders to make that information available to An Garda Síochána, which will take all measures open to it to enforce the law in this area.
However, we must remain aware of the considerable reluctance of victims to provide evidence against offenders to whom they owe money. Prosecutions for illegal moneylending are very infrequent. There is one case pertaining to illegal moneylending activities - offences under the Consumer Credit Act 1995 - currently before the courts.
Due to the infrequency of prosecutions, I believe that, in tackling the problem, legislation and enforcement can go only so far.
In addressing the issue, the greatest success comes when the support and assistance of the community is brought to bear to ensure persons in vulnerable positions are well advised about steering clear of illegal moneylending. That is why I believe that community-based initiatives such as the Money Advice & Budgeting Service, popularly known as MABS, are crucial in ensuring that people who are under financial pressure can be advised to take the appropriate steps to avoid falling into the moneylender's trap. MABS also advises people on how to reach accommodations with credit institutions and how to avail of the exceptional needs assistance available from community welfare officers. In concert with MABS, other services such as credit unions, community development projects, family support centres, social services and Government-funded voluntary organisations such as the Society of St. Vincent de Paul play an important role in providing appropriate advice and guidance to vulnerable people. Additionally, and shortly to come into force, there will be the help available under the Personal Insolvency Act of 2012 to facilitate those in substantial financial difficulty to enter into appropriate settlements. That is a far preferable route to dealing with creditors than borrowing money from illegal moneylenders.
As he mentioned it, Senator MacSharry will be aware of the efforts of the Communities Against Illegal Lending of Money, CAILM, initiative in his own constituency. This is an inter-agency approach funded by the Government, involving the local community, the Money Advice & Budgeting Service, the credit union movement, Focus Ireland, the local Garda and social services in diverting people away from illegal moneylending. I commend the work that organisation does and join the praise voiced by Senator MacSharry in his contribution.
We all share the concern for persons who fall victim to those unscrupulous individuals who prey on their fellow citizens through illegal moneylending. I believe the House will agree, however, that the powers granted to the Garda to address the problem and the penalties available to the Judiciary in this area are considerable. Unfortunately, this Bill would not provide our courts or An Garda Síochána with any powers they do not already have under existing legislation. The Bill would have no legal effect, therefore, other than to make the law less effective and more obscure by blurring the distinction between two separate offences, namely, illegal moneylending and demanding money with menaces, which would be an undesirable outcome. However, I appreciate and share the genuine concern Senator MacSharry voiced about the extent to which moneylenders exploit the most vulnerable and I welcome the opportunity to address this very important issue in this House. I urge people not to fall prey to illegal moneylenders and, if they find themselves in financial difficulties, to use the other mechanisms available to them to which I referred. Each of us should encourage organisations in our individual constituencies to publicise that message. In most constituencies throughout the country there are voluntary groups and individuals, branches of MABS and others who are engaged in this very important work.
I point out to Senator MacSharry that it is not my inclination, having been on the receiving end for too many years, automatically to vote down a Private Members' Bill. Rather I am anxious to encourage people to work on such Bills because often there are areas of importance that, in Government, one has difficulty in prioritising, given other demands. I can tell the House I have no difficulty with this, as a Minister. If a Bill is produced in an area that truly requires legislation and if the Government has not had an opportunity to address it, I will not, as Minister, automatically say we should oppose that legislation. That is the wrong approach. I believe we should encourage people, whether in this or the other House, to act as legislators and make a contribution. For the reasons given, however, I must oppose the particular provisions of the Bill before us, but I welcome that the House has an opportunity to discuss this important issue which can have such a detrimental impact on the lives of very many vulnerable people.
I commend Senator MacSharry on bringing this matter before the House, and I note with satisfaction the presence of the Minister because it is good to have a senior Cabinet Minister with us in Seanad Éireann for this kind of debate. I also welcome the Minister's attitude towards the entire issue of moneylending, one he made clear during the passage of the insolvency legislation, when I and others raised this question. It surely must be a concern, however, that there is in some areas, especially in our cities, what amounts to a crisis in terms of moneylending, in particular illegal moneylending. That this is not being satisfactorily addressed at present must be clear from the fact that there has not been a single instance since 2005 of an illegal moneylender facing serious charges, being jailed or fined substantially. The practice is widespread and we know from listening to people on the wireless they have immense difficulty from the pressure caused. I recall listening during the past six months to a woman who was put under such pressure.
I note the occupant of the ministerial chair has changed. I welcome the Minister of State, Deputy McGinley, and ask him to pass on to the Minister, Deputy Shatter, the recommendations I shall make, particularly given that the Minister who has just left indicated his strong support for the views of the Society of St. Vincent de Paul. Coincidentally, today I received a magazine from that society which makes clear recommendations. It concurs with my view that there is a crisis. As my time is limited, I wish to put those remarks immediately on the record of the House.
To reiterate, the St. Vincent de Paul Society indicates that a crisis exists. The contradiction, which is clear to anybody, is that it is the most vulnerable people who are engaging in the practice of the most dangerous form of borrowing money. Very often they cannot repay it properly. Recommendation No. 1 of the St. Vincent de Paul Society is that the Central Bank be asked to publish baseline data on the number of loans and the number of households with such loans in the Republic of Ireland. The second recommendation is that the total cost of credit should be emphasised in loan agreements. In my view, we should also include the APR figure. In his speech the Minister noted there were some unscrupulous people who charged more than 100%. They are not only the unscrupulous or the unlicensed, however. Licensed moneylenders, including the largest one, Provident Financial, which has 75,000 loans extended in this country, charges up to 187% per annum, yet this is not regarded as an offence although we complain about 20% or 17.5% being charged on credit cards. This is a very serious situation.
It is recommended that moneylending companies should not be permitted to offer loans that are more four times the proven weekly income. That would protect people who cannot afford to make the repayments. Often these are not huge amounts - perhaps €500 to cover a child's first communion - and it seems all right that people should pay €50 a week. However, they may not be able to afford this sum. It looks all right at the time of the crisis or emergency that is often associated with a family event. The society also seeks greater regulation regarding the amount which can be borrowed and how often a loan can be obtained. It suggests a minimum time delay between one loan and another and that there be only one loan per adult in a household. These are all obvious suggestions and should be kept before the mind of the Minister.
Moneylending companies should be made responsible for the lending and payment collection activities of their agents. We have had the example of a gentleman known as "The Viper", who started a debt collection agency having had a long career as a violent criminal. People are absolutely terrified of him. All he has to do is put a sign on his van - "The Viper Collects", or whatever it may be - drive in front of a person's house and I can guarantee that person will pay up pretty quickly.
There is a recommendation that the Central Bank should produce information brochures and offer financial education. FLAC has done a very good job here, with an excellent brochure, "Moneylending and the Law". MABS also does this work.
There is a crisis. It has not been addressed satisfactorily, which is clearly evident from the widescale extortionate interest rates being charged with no one being convicted of these offences.
Perhaps the Minister's speech is a little out of date. My colleague and friend, Senator Barrett, suggested that I should table an amendment to the Minister's speech because the copy I have states clearly at the top: "Speech by Minister for Justice, Second Stage Seanad Éireann, 22 May 2011". That is I think two years ago, so it may be slightly out of date, it could, of course, also be a printing error.
A report on the licensed moneylending industry in March 2007 by the Financial Regulator states:
In 2005, licensed moneylenders had approximately 300,000 customers. This represents approximately 10% of the population of the Republic of Ireland in 2005 over the age of 20 years.
I was surprised at the number of people involved, but I was even more surprised to discover that 89% of the customers were satisfied. That cannot represent naivety, particularly when one considers that 50% of them gave them ten out of ten. It is obvious to me that actually the problems arise in the area of unlicensed and unregulated loan sharks.
When I noticed the Minister was leaving I had to frontload some of my remarks. I heard a woman on the radio speaking about taking her life because she had borrowed in order to help her son with a deposit. She had sold all her furniture. She had no food in the house. She was sleeping on the floor because she was paying enormous sums in interest. To my mind that is not tolerable. For that reason I am glad that Senator MacSharry introduced this legislation. The Minister is slightly contradictory and states the Bill replicates offences that are already on the Statute Book, namely, blackmail, extortion, demanding money with menaces and so on. He further states that it will have the contradictory effect. I am left to wonder if these provisions also have a contradictory effect.
I congratulate Senator MacSharry. He has raised an important matter. I am not satisfied that it is being effectively dealt with. We owe the most vulnerable in our society the protection of the law. It appears that legal moneylenders, in spite of their enormous rates of interest, are providing a service that people are capable of dealing with but the illegal moneylenders are bleeding vulnerable people to death in some instances.
I listened with interest to the debate. I have regard for the contributions that Senators MacSharry and O'Brien have made during my two years in the Seanad. The theme of the legislation is extremely important and as Senator Norris quite rightly said, it deals with the most vulnerable people in society.
Many people have very little time for banks and I would probably include myself in that category, but I have no tolerance at all of moneylenders. The place of moneylenders in society is close to the bottom of the barrel. I am glad this matter is on the Seanad agenda, as it gives a forum for discussion of a topic that comes in under the radar in comparison to dealing with the euro billions in bailouts and the 150,000 mortgages in arrears. People may owe as little as €400 to €500 to appalling individuals who have no sense of social justice, decency and responsibility. These people, who may live in local authority housing, matter. They may not have mortgages of €100,000 plus in arrears. These people are managing just about to pay their rent but are being scalded and hounded by these merciless individuals. The reality is that people who use moneylenders possibly do not have the skillset to know their legal rights, to know what protections are in place and that is the reason it has become apparent to certain groups. Senator O'Keeffe has been telling me about the group in Sligo which is doing phenomenal work on behalf of people. They may feel that the current legislation is not being properly implemented. That is the major challenge.
I take on board the comment by the Minister that were this Bill to become law, those engaging with it would be dealing with replication. We do not want to create that situation, but in fairness I do not think that was the intent. I think the Opposition has made a very genuine effort to raise an extremely important issue and the Minister's words were very conciliatory in that regard, when he said that he does not knock down Bills in Private Members' time easily, as he did not like this being done to him when he was in opposition.
The Minister expressed the fear of duplication, with more cogs in the wheel that were unnecessary, making the bike unsafe. The major problem is that if this Bill were enacted, it would create a situation in which the most vulnerable people could become more confused about their rights than they are at present. I welcome the Minister of State, Deputy McGinley, who is a very loyal contributor to this House. It was remiss of me not to have done so earlier. The challenge for the Government is to focus and become challenged to ensure that the most vulnerable people know their rights when it comes to moneylenders. There are some very useful ways of channelling that type of information. Citizens Information and MABS have already been mentioned but there are other ways. One could send out explanatory literature twice yearly with social welfare payments, explaining in simple language what people's rights are when dealing with moneylenders. It is only a tiny minority of people who find themselves in these difficult situations who have the wherewithal to go to the Garda Síochána to make a formal complaint and request the assistance of the State mechanisms to assist them. I can remember a case about four years ago, in which a client of mine found herself in an appalling situation with an illegal moneylender and her PPS card was being requested. I told her that she and I would both meet the individual and that would deal with the situation. We did. An Garda Síochána got involved and dealt with the situation very quickly. The matter was resolved.
We need the Government to sit down with organisations such as the Society of St. Vincent de Paul, MABS and a number of other agencies and perhaps set up an interdepartmental working group or a working group with representation from those various different groups to identify ways of communicating to the people who are the most vulnerable what their rights are, what they can expect in terms of protection from the State and how to deal with moneylenders. We have already heard from the Minister that one cannot be a moneylender in this country unless one has a licence. If a moneylender has no licence he or she is in breach of the law and is acting illegally. Second, the business model and client base of licensed moneylenders must be continuously audited to ensure they are acting with the utmost integrity in dealing with their clients.
I commend Senator MacSharry for raising this issue. The group in Sligo dealing with this issue is doing very good work and I commend his colleague on the council for the work she has done.
I would like to see what is happening in Sligo reflected in other counties, so that these groups mushroom throughout the country to equip the people with knowledge. It has been a very worthwhile debate and I sincerely hope we see some action as a result.
I welcome the Minister of State and look forward to seeing him in our home county tomorrow. We will give him a very warm welcome, as usual. I compliment my colleague, Senator MacSharry, on bringing forward this legislation, and the theory behind it is to be commended. Nevertheless, it raises some fundamental questions. The purpose of the Bill is to provide new offences and prohibit unlicensed moneylenders from subjecting victims to harassment. While this may work fine in theory, there is also a responsibility on the Government to try to ensure that if the law is passed, there is additional support for the people at whom it is directed. Those involved with moneylending are usually in the very lowest strata of society and at their most vulnerable. They have gone through all the conventional methods of seeking finance for whatever purposes they need, and it is usually family reasons like communion, confirmation or a few days respite. It could be for a variety of legitimate reasons, even putting food on the table.
I must be careful in choosing words but with the plethora of Government and other agencies out there, there should not be any room for moneylenders. There is the Society of St. Vincent de Paul, various other worthwhile charities, the Money Advice & Budgeting Service, MABS, which helps people, especially those with limited resources manage their money, and there is the social welfare system. There really should not be any need for moneylenders, but the fact that there is means there is something wrong or malfunctioning within the system that drives people to extreme lengths, putting them in a most vulnerable position where a Bill of this nature must be passed to address issues of intimidation and harassment.
My only difficulty with the practicality of the Bill is that because of the circumstances of people who are involved with moneylenders, they will not only be the most vulnerable but will be so intimidated that gardaí will not be able to pursue prosecutions. To pursue a prosecution one must have witnesses and statements and go through the courts, all of which is included in this Bill. That will not happen. People will be fearful and we have heard some of the horrific stories circulating about the intimidation by moneylenders or associates. This has led Senator MacSharry to bring forward this legislation. One particular criminal who goes under one of the funny names applied to give a human face, such as the Penguin, went around with his name written on a van. He said he set himself up as a legitimate moneylender.
It is the Viper.
He indicated he had set up a legitimate moneylending service but if a person fell foul of him, he did not have to violently attack anybody. All he had to do was provide an implied threat. He would turn up in his van outside a person's house, with "Viper" written across the van in big and bold lettering, and he or his associates would just sit there. How does a Bill like this address such intimidation or harassment? I would venture to suggest that the person to whom this implied threat of violence is being directed would be so scared that the last thing he or she would do is go to the local gardaí. That is why I suggest that on top of this Bill, there should be some sort of mechanism that the State should be able to address. I do not know how this could be done as we are talking about human nature but it is the only flaw I see in the practicalities and effectiveness of the Bill.
It seems we should consider the issue in the same way as prostitution and go after a different source. Perhaps more resources should be given to the Garda? When people like the Viper are questioned, they say they are running a legitimate business. He should not be allowed to run a legitimate business because he is a convicted thug and criminal. Perhaps we should examine how people applying for trading licences or other aspects of business get approval. They may comply in theory with 90% of the law in order for them to be able to stay outside the law 10% of the time, which in this case is critical. Perhaps in this way we could facilitate the State to go after these people, helped by legislation like this, so that when they are caught, they will be put away for a long time.
I welcome the Minister of State to the House. I join other Senators in acknowledging Senator MacSharry's concern and his efforts in this regard. Nobody in the House would have a difficulty in the broad area of moneylending, especially illegal moneylending. People have outlined very clearly that it is a criminal activity that causes grief, not just with financial worry for families but also on a much wider scale when it comes to the kind of intimidation and harassment used on a regular basis.
It was not Senator MacSharry's intention in the Bill to make the law more confusing, as has been suggested, by merging the two very separate and distinct offences of unlicensed moneylending and demanding money with menaces. I share many of his concerns - we are both based in Sligo - but neither of us wants to add to anything that would make the law more confusing. Raising the matter and related issues is important, and it is clear that for the Government, the challenge remains what can we do to tackle this very difficult problem. There are many and varied approaches to take so I will mention some possible action that could be separate to legislation. The difficulty with bringing people before the courts has been explained, because people are intimidated and afraid and do not know what to do. The last thing people will do is point out a particular person and be willing to give evidence in court. I am aware there are two cases pending in Sligo that are with the Director of Public Prosecutions, and I hope they will come to court and help set an example.
I give credit to the work of the Communities Against Illegal Lending of Money, CAILM, group in Sligo, set up as a subgroup of the RAPID community safety task force. It includes the RAPID co-ordinator, community gardaí, the credit union, MABS, the Sligo Education Centre, social services, the Springboard resource house project, the Cranmore community co-op, Northside CDP, other community representatives, the Cranmore regeneration project, Sligo Borough Council and elected members. It is often difficult to appreciate the level of co-operation required, but it is a very good model and perhaps one we might see in other parts of Ireland. People who are genuinely concerned have come together to share expertise and knowledge, and although their achievements so far may be terribly simple, they have also been terribly effective.
The first achievement is related to raising awareness and getting the message out there. The group speaks to people in the community, particularly in Cranmore, where there has been a specific problem, but also in other areas of Sligo. CAILM has produced a brochure, entitled Lenny Disease in Your Community, which indicates that so-called "lennies" are nasty and poisonous pests that can be found anywhere in any community. They are quite cunning but are generally quite dumb. Of course, a "lenny" is an illegal moneylender. These leaflets have been spread as part of an awareness-raising campaign that includes press releases and radio pieces.
They have presented to the joint policing committee in Sligo and, of course, they have lobbied Members of the Oireachtas. That is part of their job. We sometimes underestimate the need for awareness raising. Many people do not know there are other avenues available.
The other step, after awareness raising, is to do something about it. The initiative of developing a community bank in Crannmore estate has been very welcome. It is operated by Sligo Credit Union and the Resource House project. It is a small bank specifically for that area and it is slowly beginning to encourage a savings habit in people who were never able to have a bank account, never understood what a bank account was, never wanted a bank account and, perhaps, had used illegal moneylenders on previous occasions because that is all they had available to them. They have actively promoted the services of credit unions, MABS and social services. They have done this through the schools, in summer school holidays and have gone in and talked very effectively to parents trying to encourage them to see different ways they can recycle and reuse things that perhaps they did not think of before. It is a very slow, but effective, process. Finally, CAM has been working very closely with the Garda to try to help people to come forward and say, until we start prosecuting people and we see them in court we will not understand that this is a crime and we will not be able to send a message.
I was very lucky many years ago when I worked at the BBC to go to Birmingham where they had a very good pilot project. It was only in the early days then. I remember them saying it to me at the time, when I worked as a senior producer, that they very much hoped it would be a project they would roll out across the UK. Indeed, they have done that. They have used a lot of money. They have seconded police officers who specialise in gathering intelligence on moneylending. They have had 180 prosecutions since they have been set up. They have very specific support for victims. They work very closely with the trading standards team. They have financial inclusion partnership officers who do nothing else but specifically support communities and raise awareness. They do what Communities Against Illegal Lending of Money, CAILM, is doing but on a much grander and better-financed scale. They are using social media, talking to credit unions and local banks and effectively taking the fight to the loan sharks and saying that until they do that, nothing will change. One of the people they prosecuted and imprisoned had charged the highest APR ever recorded, 117,000%.
There is a lot of work to be done. The challenge is with Government. It may not be through this piece of legislation, but it certainly means there is a support process. I advocate that the work done by CAILM, funded by this Government, would be used as a model to be rolled out and supported in a much wider context so that we would be seen to be active on the ground to defeat what is an extremely serious and growing problem, particularly for families who can least afford it and who are least able to cope with it.
I thank Senator MacSharry for raising these issues, and indeed Members on all sides of the House. This is an important debate where the Seanad reaches out to help those in serious need because of what has happened to finance and banking in this country. In contrast, half of the bank rescue fund was paid to Anglo Irish Bank, which was a bank for approximately 18 people. Tens of millions, billions of euro were paid out in that case and the system was so dysfunctional that it left many people victim to the moneylenders, as Senator MacSharry and the Minister said.
It must be a concern that the Minister said there has been only one prosecution for illegal moneylending. It is a far greater problem than that suggests. We have lost out of the system and weakened institutions which would be of value to the people whom Senator MacSharry is helping with his legislation. I commend the Credit Union Movement and the great work of people such as John Hume in promoting those, the Money Advice and Budgeting Service, MABS, the Free Legal Advice Centres, FLAC, and the Minister for Justice, Equality and Defence, Deputy Shatter, with the Personal Insolvency Act. We have to act against intimidation. Senator Michael D'Arcy was most concerned in Wexford at the heavies, quasi criminal groups, who call around to collect tractors and so on, in a period when some of his farming neighbours were in difficulties.
We need to look at the institutions we have lost such as thrift associations and savings clubs. The Trustee Savings Banks were banks for low income people to try to put money by. If one can do it, learning how to work with credit is a major advantage in trying to run households and develop the wider economy. Banks used to do things like promote thrift and savings in schools, but they became obsessed with lending to the 18 people in banks such as Anglo Irish Bank. Building societies used to be mutual benefit societies, part of the wider co-operative movement where people got together to buy each other's houses. One of the building societies that now has a financial sector name was originally the Dublin Working Men's Mutual Benefit Building Society. People got together to help each other to manage their financial affairs.
I commend the Society of St. Vincent de Paul. We need banks with a human face and we have not had those. They have been so busy running around with the people who bankrupted the country. The low interest rate policy that is so widely believed in by so many international economists deprives low-income people with small savings of some income so that we can promote property bubbles and fund massive borrowing by really rich people. That is a form of inequality in society that we have to address.
I had not heard of the 117,000% interest rate that Senator O'Keeffe has just drawn attention to. The Irish Times of 7 March 2013 reports a 300% interest rate on loans. Sinn Féin last year sought to introduce a cap of 40%. Legislation in Canadian limits interest to 60%, Spain 10%, France and Belgium 20% and Germany 18% to 20%. We need to address the inequality in the access to funds for renegade builders and ordinary citizens, particularly at the low end of the scale. In the Irish Examiner of 26 June 2012 Mr. Brendan Dempsey of the Society of St. Vincent de Paul is quoted as saying "nobody will give evidence" in cases against moneylenders. The Minister has acknowledged that. Are we naive to think people would even go to the Garda? It may be that these people are so isolated, fearful and separated from the rest of society that even gardaí would be regarded as establishment figures.
We must deal with loan sharking and moneylending. We must promote the democratisation of society's saving so that low-income people can participate in what is part of a developed economy, the ability to borrow money, use it wisely and pay it back.
I wonder if the fine of €1,500 is a bit small compared to the illegalities and the criminality that Senator MacSharry is attempting to combat with his Bill. I commend it warmly, and all Members of the House must, because this is a real problem for people who are socially deprived and it has to be tackled. Sometimes we are all more interested in removing income limits or universalising a benefit, which is really extending something from very low-income people to the rest of society, who may be well-off. However this is a measure designed to deal with low-income people who require better institutional assistance and the restoration of some of the bodies that used to help them in this regard.
I commend the Government for rescuing the Credit Union Movement from the difficulties we saw it in because we need to get credit and help to people with their financial affairs. Mr. Micawber was mocked in the glory era. Who wanted to balance the books like that? Governments and countries do not do it but households have to do it and we should assist in any way we can. I commend Senator MacSharry again.
I welcome the Minister to the House. I commend Senator MacSharry and his colleagues for bringing this important issue to the fore through the Criminal Justice (Unlicensed Money-Lending) Bill 2013. Other colleagues have spoken eloquently about the real trauma, fear and intimidation that takes place in the unlicensed or illegal moneylending sector where people are forced to pay enormous rates of interest, as illustrated by Senator Susan O'Keeffe. All of us would unequivocally condemn those practices and have full sympathy for the motivation behind the legislation. All of us are agreed on the need to ensure the issue is dealt with rigorously through the law.
In his contribution, the Minister for Justice and Equality, Deputy Alan Shatter, was very clear that a consequence of accepting the Bill would be to create a duplication and a dangerous blurring of offences. We all appreciate the motivation but the provision in section 2 to condense two different offences that are currently on the Statute Book, of demanding money with menaces on the one hand, blackmail extortion, and that brand of offence with this very separate offence of unlicensed moneylending is a dangerous blurring. The Minister has pointed out that section 98 of the Consumer Credit Act 1995 deals with the unlicensed moneylending aspect of that particular offence and gives the Garda very extensive powers to stop, question or search and remove documents or money from people without warrants where it reasonably believes that such documents or money may be in that person's possession for the purpose of moneylending. Extensive powers are already in place. The penalty was increased in 2005 for that offence up to five years imprisonment or a fine of €100,000, which is entirely appropriate.
Section 17 of the Criminal Justice (Public Order) Act 1994 deals with the separate offence of blackmail, extortion and demanding money with menaces. It provides for a heavier penalty, which is correct, because that is a more serious offence and an offence of a different nature, of imprisonment for 14 years on indictment. Under the Criminal Justice Act 2007 we have the ability to provide for monitoring and protection orders where people are subjected to harassment on an ongoing basis by moneylenders. There is a strong argument, given the nature of the debate, for codifying the offences. An issue I have often addressed in the House with the Minister, Deputy Shatter is the lack of codification and the unsatisfactory nature of our criminal law. In order words, we have to look to different statutes. On the face of it the Criminal Justice (Public Order) Order does not appear to have anything to do with blackmail. It deals specifically with public order offences, such as, drunk and disorderly in a public place and so on, therefore, it is arguably not the appropriate place to find an offence of blackmail or extortion. Similarly we might ask why there is a separate Act for dealing with monitoring and protection orders and why criminal law is not codified in a much more coherent manner. That is a much bigger issue. It is certainly an issue that Senator Jillian van Turnhout and I have addressed in the context of child sexual abuse offences where one has to look to a whole range of statutes to find what the law is on offences of sexual abuse against children. There is a bigger issue here about placing offences in an appropriate and accessible place. I know that is what the Senators are seeking to do in this Bill but, as I have said, it would duplicate existing law.
A further valid point was made by the Minister, which was picked up by Senator Sean D. Barrett and others, which is the difficulty in securing convictions. That has nothing to do with the offences on the Statute Book because one could have any number of offences. The difficulty has been getting people to come forward. First, there is a lack of complaints to the Garda which could trigger investigations and prosecutions and, second, even where an offence is suspected and the Garda has commenced investigation and taken a prosecution there is a lack of willing witnesses who will come forward and give evidence and testify and swear up, so to speak, in criminal cases dealing with illegal moneylending. The reality is that people who are in vulnerable positions and who have been subjected to the type of practices the Bill seeks to deal with are often not willing to come forward to give evidence for obvious reasons. The Minister is right to say that the real challenge for policymakers and legislators is to ensure people have viable alternatives available to them in order that they do not have to avail of these unscrupulous lenders. The Minister referred to MABS. Senators mentioned other efforts such as the CAILM initiative in Sligo. Clearly these are the best way to ensure people do not fall into the hands of moneylenders.
I appreciate the Minister's comments that he considered accepting the Bill and that he was not going to oppose it for the sake of it because it is a Private Members' Bill. We have had a good record in the past year or so of having Private Members' Bills accepted. It is important that we would not, as a matter of course, oppose Private Members' Bills. Whether they come from Government, Independent or Opposition Senators it is important that each Bill is scrutinised on its own merit and, in fairness, this one was so scrutinised and a clear rationale put forward for opposing it.
I support the Bill which has been introduced by my colleague, Senator Marc MacSharry, and compliment him for the work and effort he has put into it. It is a very difficult area and a serious problem. I was disappointed that the Minister dismissed out of hand the efforts of Senator MacSharry. The current legislation, irrespective of what category, is failing those people who are caught in the trap of receiving money from these moneylenders. Unfortunately, in a time of recession the loan sharks, the unlicensed moneylenders, come to the surface. They emerge like rats from a sewer in difficult times and are difficult to deal with. The people who are in dire straits and go to moneylenders probably have a poor record with banks, no account with credit unions, may have burned their bridge with the Society of St. Vincent de Paul and exhausted all opportunities and as a last resort are prepared to throw the last dice in an effort to get €100, €200 or €500 to survive. That is a most unfortunate situation.
I listened carefully to what the Minister had to say. He said there was sufficient law in this area and that this Bill would be duplication. If that is the case why is the scourge of moneylending raising its ugly head so frequently throughout Ireland at present? That is likely to continue while the recession continues. I would hate to see poor people who are borrowing money at exorbitant interest rates, sometimes 300% which is extraordinary, further crucified. One has to ask from where those who are providing the money are getting it. Is it money that has been laundered? Is it money derived from the sale of drugs or other illegal or illicit activities and, if so, the current laws are not adequate to turn the screws on them, because it is obviously continuing.
Like other speakers, I laud the great work done by our credit unions throughout the country, the Society of St. Vincent de Paul and so on who have done immense work. The moneylender is a bit like a drug addict, he needs a supply and has to survive. He will not go to the Garda and will not squeal on the supplier of drugs and is in a desperate situation for a fix. Those who are borrowing the money, sometimes to feed their children or keep the roof over their heads, will do anything in desperate situations to get a few bob and will be very slow to bite the hand that feeds them on that particular occasion. The modus operandi of some of the loan sharks is threats, intimidation and instilling fear into unfortunate victims. In many instances, having borrowed a relatively small amount of money at the start, the loan sharks are so astute that before one repays the last few bob one is encouraged into another roll-over scenario.
It is a desperate situation and one problem leads to another.
Moneylending is a serious issue and Senator MacSharry must be given great credit for highlighting the issue. At the height of the boom moneylending was a miniscule problem. The Irish and European wide recession has changed its status and moneylenders, who are primarily illegal, are coming out of the woodwork again. Moneylenders can see that people are in desperate situations and dangle a carrot in front of them, entice and trap people. The Senator's Bill has highlighted a real problem that is evident in our towns, cities and throughout the country. The law does not protect the victims of moneylending and that is why he has raised the issue.
I shall conclude by asking the Minister of State to convey a message to the Minister for Justice and Equality that moneylending is a serious ongoing problem that will not go away. The current legislation does not protect victims. That is the truth. We cannot sidestep this unsatisfactory and difficult issue. Senator MacSharry must be commended for bringing the matter to the attention of the House. I understand that the Minister does not wish to accept the Bill. If he does not accept the legislation then we will not see the end of the problem this year or next year and the citizens and country must face an ongoing, serious and unfortunate problem.
I welcome the Minister of State to the House. I was not scheduled to speak tonight. When I saw that the Bill was scheduled to be debated I decided to add my voice here because it is such an important issue. I may not always agree with Senator MacSharry but I give him great credit for bringing the matter into the political arena.
Moneylending exists, whether we like it or not. I spoke during the debate on domestic violence which is a taboo subject. Moneylending is also a taboo subject. People will not admit that they borrow from moneylenders. People approach public representatives when they want help but, normally, they will not admit to borrowing from moneylenders. Illegal moneylenders prey on the underprivileged, the unemployed and the socially deprived. They are the people who can least afford to meet exorbitant repayments.
I lived in a local authority estate once. I remember a company, and I shall not name names, arriving in the estate and started off by offering a hire purchase option to enable people to buy little items of clothing for their children or household goods. The company then offered money to people to pay the costs of a first communion or confirmation ceremony even when people did not seek it out. On many occasions the woman of the house, either the wife or partner, borrowed the money but never told their husbands or partners. The women were put under fierce financial pressure to pay the loan back without the knowledge of their husbands or partners. Of course a borrower was never allowed to clear the loan. As Senator O'Donovan said, one would be about to pay it all off when one would have to borrow for something else or robbed Peter to pay Paul. A person would end up owing money all of the time.
One does not have to approach legal moneylenders for loans. We have all seen television advertisements for credit cards but the small print states that the interest charged can range between a whopping 34% and 38%. However, people do not take much notice of the small print and apply for a card anyway. One pays a lot for the privilege to use the cards.
I congratulate Senator MacSharry for heightening awareness of moneylending. It does no harm to talk about the problem. People have been harassed, bullied and threatened by illegal moneylenders. They will not come forward to lodge a complaint because they are physically afraid and fear for their lives. Every day television programmes warn about moneylending and the lengths that moneylenders will go to in order to make people pay.
I must say, and I purposely allowed this to happen, I signed a contract to buy a dongle for my computer. Last February, I rang the company to cancel the contract but was informed that I had to give one month's notice which I agreed to do. In March I left my direct debt stand and in April I cancelled it thinking that I was finished with the matter. I then received a telephone from a reputable company claiming I owed money for March. I informed them that I had paid by direct debit but the person on the other end of the line was horrible to me. He was so obnoxious that I refused to deal with him and asked to speak to his supervisor. Unfortunately, he was no better. By the way, both men were not Irish people. Even though the company is based in Ireland one must speak to a foreign person when dealing with such matters. The supervisor did not treat me any better because he told me that I was trying to avoid paying a bill of €14. As a result I decided to let the bill run to see what would happen. Every day since I have had three telephone calls from the company seeking €14. I have no problem paying €14 and can afford to pay the sum. I wanted to get a feel of what it is like to be harassed and to owe money. I can now identify with people who have been harassed. I said to my husband that if a company is willing to pursue me like that for €14 what will it do when a person owes €14,000 or mortgage money. Obviously I will pay the €14 or I shall be listed as a bad debtor. The company has stopped ringing me in the past few days. I presume that it will start sending me court letters so I had better pay the sum. All of the Senators would talk about me if I was put on a list of debtors.
There is no fear of that.
Senator Bacik mentioned codifying crimes. I encountered the same problem when I tabled a motion two weeks ago. There is no crime in Ireland of domestic violence or for illegal moneylending. I hope that the Minister will take on board the words and sentiments expressed here today. If he is not going to accept Senator MacSharry's Bill then I urge him to consider it and incorporate the Senator's ideas into a Government Bill. The matter must be deal with as soon as possible.
I commend Senator MacSharry and his Fianna Fáil party for tabling the Bill and a Private Members' Bill. The more legislation that is introduced in the House the better. Far too often motions are tabled and my party is as guilty of that as any other. We are here to legislate and we have valuable legislation before us this evening.
Unfortunately, we are all becoming too familiar with moneylending. Many families enter our constituency offices on a weekly basis. They have told us about their concerns about unscrupulous moneylenders. It is a traumatic experience for people who are in their grip.
Over the past six years more families have fallen prey to moneylenders, unlicensed moneylenders in the first instance but also licensed ones, who have acted in an unscrupulous manner. The illegal moneylenders are of greater concern to us all. Credit has increasingly become harder to secure and has led to people going to moneylenders. There is high unemployment, wage cuts and social welfare cuts. A range of benefits have been cut over the past five years in six budgets. People are trying to pay their domestic bills even though they have less money in their pockets, less social welfare or have lost their jobs.
As a previous Senator remarked, people must pay high mortgages that they cannot afford. Families are under all sorts of pressures to pay basic bills. Any of the charities that work with those who are vulnerable will tell us that, increasingly, they are going to moneylenders to pay for basic bills. There must be something wrong with that. We must recognise that as a wrong which needs to be corrected. Unfortunately, it is part of the impact of the wider austerity agenda on families. According to Social Justice Ireland, the State's poorest families experienced a disposable income drop of almost 18.7% in 2000 alone, at the height of the Celtic tiger. One can imagine how much worse matters have become for those families since, especially from 2008 onwards.
The "What's Left" tracker 2012, which was published by the Irish League of Credit Unions, provides a graphic picture of the human face behind these figures. The report stated that 1.6 million families are left with €100 or less each month when bills are paid. That is a staggering number of families who are left with that level of disposable income. When they are faced with increasing bills and an inability to get credit from banks or wherever, it is quite easy to see how many fall prey to moneylenders.
We also must acknowledge that there is considerable variety in the types of moneylenders. Many are perfectly honest, above board, well-equipped, have proper procedures in place and deal with people in a fair way. The word "moneylending" has negative connotations, but there are persons engaged in moneylending who are licensed moneylenders who behave in a responsible way. Equally, there are many who do not and there are many unscrupulous ones.
We all have heard worrying and upsetting stories about the behaviour of some of the more unscrupulous moneylenders, especially when it pertains to debt collection. Senator Marie Moloney gave an example of a company - it was not a moneylender - pursuing her for a small sum of money. I certainly have had many stories recounted to me in my constituency office of persons who are being chased and harassed by moneylenders who are linked to big criminal gangs in Cork, Dublin and Limerick for money they owe. In fact, I had a meeting with the chief superintendent in Waterford a year ago where there was one gang that was trying to control a housing estate and its communities and using moneylending as a way to get a grip on those communities. In fairness, the Garda has been proactive in dealing with these individuals.
There is a need for tighter regulation in this area. Fianna Fáil's Bill is part of it, by putting a bar for a period on someone who has been convicted of the offence of unlicensed moneylending from communicating with or harassing any victims of that unlicensed behaviour. The offence of unlicensed moneylending covers not only those directly involved, face to face in the act of moneylending but also those directing or aiding the act. Dealing with the latter is vital, given that many of the more unscrupulous actors, as I stated earlier, get others to collect the debts for them. They adopt an arm's length approach. They lend the money but they have others collect it for them, and the type of practices used leave much to be desired.
Last year, my colleague, Deputy Pearse Doherty brought forward a Bill in the Dáil to deal with this issue. It was to amend the Consumer Credit Act 1995 to introduce a cap of 40% on the annual percentage rate a moneylender can charge a borrower. The rate of 40% is reasonable in that one could make a handsome profit on the back of that, yet that Bill was voted down by Fine Gael and the Labour Party. The excuse given was that if the Bill was accepted, it could drive some moneylenders out of business. If the consequence of introducing such a Bill drives some moneylenders out of business, I am all in favour of it. If one cannot make a profit on the back of 40% APR, there is something seriously wrong.
We need more robust regulation and more supports. We need to take the matter seriously and ensure we do what we can to help those who are victims of moneylending.
The Bill is probably overdue. I commend Senator MacSharry, as everybody else who has spoken has done, on his initiative in this regard. In commending him, I would condemn the Minister for his failure to take this on board. This is a real issue, as everybody in the House, whether on the Government or the Opposition benches, will be aware. It is a terrible affliction on those who find themselves in this position. We have seen many robust and illegal methods used to extract repayment from borrowers. We are talking about borrowers who are the most vulnerable and disadvantaged in society. This Bill deserved the Government's support in this regard.
Senator MacSharry has identified this as a growing problem. While it concerns illegal moneylending, there are issues surrounding legal moneylenders as well which also need to come under focus. The Senator is seeking to ensure the punishment is commensurate with the seriousness of the offence and that there would a prohibition on those convicted of unlicensed moneylending from harassing those who have been their clients.
Senator MacSharry might well go beyond that. I would ask him to consider, because I am sure this Bill will return, perhaps in a different format, if it is voted down today, ensuring illegal moneylenders are aware that any contract they enter into would be regarded as being void by the State, in other words, an illegal moneylender would have no recourse to recovering his or her money legally and also there would be severe punishment for any strong-arm tactics to recover that money.
While I criticise the Minister for not dealing with this, it is fair to say that it is 40 years since RTE produced a programme on the issue. At that stage the scourge of illegal moneylending was refuted by Members in this House and led to an inquiry which substantiated what was going on.
The fact that nobody has been convicted of illegal moneylending over the past seven or eight years at a time of harsh economic circumstances for most of the population shows the legislation is inadequate and is certainly not being enforced by the Garda. In some instances, there is a reluctance among those who are caught up in this scenario to come forward and make a complaint because of the danger to which they feel themselves personally subjected. We have heard of cases here, and for that matter in Northern Ireland, of collateral such as pension books, post office books and benefits being removed from clients or their having to attend at certain locations to hand over either their social welfare or pensions to these moneylenders. The consequences for many have included not only threats but also physical assault and illegal seizure by moneylenders of the goods of borrowers. Sometimes lenders force their victims to carry out illegal activities and commit offences, purely in order that they may extricate themselves from their difficulties.
It is past time we got much tougher with people who take advantage of those who are in difficulties.
In my book, the reasons given by the Minister for not accepting this legislation do not stand up. Moreover, the State is also aware that details regarding licensed moneylenders, which can be found on the Central Bank website, show some of the charges made are staggering. I am told that in some instances, the annual percentage rate, APR, is as high as an incredible 287%. I suggest this Bill, which constitutes a start in the right direction, should at least be kept on the Order Paper. If the Minister believes it could be improved, by all means let him or others bring forward amendments to substantiate that. However, Members should avoid doing what they did two years ago, when efforts were made to deal with the position regarding bankruptcy and insolvency. They sat on the problem for a couple of years before legislation was passed, which actually gives all the cards to the banks. People who are in financial difficulties cannot now resolve them unless the banks acquiesce. Are Members stating those who are victims of moneylenders will be stuck in the same position, whereby they only will be able to extricate themselves from their difficulties if the moneylenders acquiesce? That is an appalling situation to allow to continue.
I wish to share time with Senator Jim D'Arcy.
Is that agreed? Agreed.
I will be brief. The subject raised by Senator MacSharry unquestionably is very important and is something all Members have witnessed in the constituencies in which they live throughout the length and breadth of the country. However, I find it extraordinary that some Members, including the last two speakers, have come into the Chamber without reading the Minister's response to the debate and the Bill's introduction. I will quote two items from his speech. He stated:
The focus of today's debate is illegal moneylending, which is addressed by section 98 of the Consumer Credit Act 1995. This prohibits any person from engaging in the business of moneylending without a licence. Acting as an agent of an unlicensed moneylender is also prohibited.
He then went on to outline what were the powers and to make the single point that sums up the whole lot, namely, "The Bill effectively replicates offences which are already on the Statute Book". In other words, the offences provided for in the Bill before Members are already covered by the Statute Book.
In common with all previous speakers I find reprehensible illegal moneylending and the pressure it puts on people. Similarly, what are called payday loans put people into terrible situations and whatever can be done to deal with this should be done. Senator MacSharry is a thoughtful politician all the time who presents his politics in a thoughtful way most of the time. However, he has brought this matter to Members' attention. In this context, I note that a young writer approached Mark Twain with his new novel and asked the author what he thought of it. Mark Twain replied he had read it all before and when the writer protested that he could not have done so because he had just written it, Twain repeated that he had read it before. When the writer asked where he had read it previously, Mark Twain replied, "In the dictionary". It was words.
As Senator Cummins has noted, Members have been informed that thankfully, all of the contents of this Bill already are on the Statute Book. Consequently, what is needed is enforcement and proper attention paid to the issue in order that people do not get into such terrible situations. Finally, I encourage anyone who is in difficulties to contact the Money Advice and Budgeting Service, MABS, and have his or her situation sorted out by that service. While it is not perfect for every situation, it is of great help.
I will be brief. I commend my colleague, Senator MacSharry, on bringing to the floor of the Seanad this important legislation. This is the third legislative item Senator MacSharry has presented to the House. He has presented the Family Home Bill 2011, the Access to Cancer Treatment Bill 2012 and now this Criminal Justice (Unlicensed Money-Lending) Bill 2013. Unfortunately, I regret this Bill appears to be destined for the same fate as the other two Bills on which Senator MacSharry worked, as the Government is intent on voting it down. This is a pity and as Senator Walsh has noted, it would be preferable were this Bill accepted by the Government and left on the Order Paper. If the Government has better legislation to put before Members, I encourage it to so do with haste.
It is not a question of legislation.
Senator Wilson, without interruption.
I understand and appreciate the brief contribution made by the Leader this evening, in which he pointed out, quite rightly, that the Minister had stated legislation is in place that covers illegal moneylending. However, the Minister also referred to the infrequency of prosecutions. Why are prosecutions infrequent if there is legislation on the Statute Book that is effective in dealing with this difficulty?
People are afraid to come forward and no legislation will change that.
Senator Wilson, without interruption.
This is the reason my colleague, Senator MacSharry, has introduced this legislation. I accept the points made by Senator Conway and the Minister.
The Senator is confusing things.
People may be reluctant and rightly so. This is because they are afraid for their lives, as most illegal moneylenders are gangsters and criminals.
Thugs.
As the Minister noted in his contribution, the Garda has widespread powers to deal with this issue. If this is the case, why is the Garda not dealing with the problem? These are the questions that must be answered by the Minister on foot of the introduction of this Bill. The most vulnerable people are being affected by these gangsters and thugs. While the latter are the unlicensed operators, I also would include the licensed moneylenders in this regard. I challenge the Central Bank and the Financial Regulator to check up on the licensed operators because I believe they are breaking the law and using heavy-handed bully-boy tactics to try to extract exorbitant interest rates from their vulnerable clients. While Members have suggested people should go to MABS, these people are at their wits' end. They are maxed out with the credit union, which is the only financial institution to which they have recourse. They have no other option but to seek to get money to pay for Christmas, holy communions, confirmations, school uniforms and in some cases, to pay to put food on the table. They must do this to supplement the social welfare payments they are receiving but which are going to pay moneylenders.
As colleagues have outlined earlier, the Society of St. Vincent de Paul does excellent work but it does not have sufficient resources to cope with the difficulties such people face. I agree with Senator Moloney's observations with regard to the pressure under which she was put by a reputable business for €14. However, with respect, I suggest the rasping she was put under is nothing compared with what these people are going through.
Agreed.
I understand the Senator was only making that point.
I welcome the Minister of State, Deputy Costello, to the House and note he is the third Minister to attend this evening. I urge him to reconsider, on behalf of the Minister, Deputy Shatter, who, as everyone knows, can be shrouded in a straitjacket of pomposity from time to time. Admittedly, he was reasonable enough this evening.
The Senator never encounters that on his side of the House.
I ask that this Bill be accepted this evening.
If the Government could come up with better legislation then I suggest it does so.
It is with great regret that, yet again, Private Members' Bill No. 3 for me, is going down the tubes. Of all the Bills I initiated, this is the one where there was the least excuse not to accept it. I thank all Members for their commendations. As a former Ceann Comhairle in the other House who was a member of the Labour Party famously said when he was retiring some years ago, I wanted to kick myself to ascertain whether I was still alive, as one Member after another, Ministers included, got up to commend him. I do not wish to be commended. I abhor how we all commend ourselves in the Seanad. I said that last week in the context of amendments to motions and how Governments commend themselves. I said it when I was on the other side of the House also. I could not stand it.
We want progress on the issue. First and foremost, I disagree with the Minister for Justice and Equality, Deputy Shatter, who was contradictory in his statements on the existing legislation. I accept that legislation exists in the area and while similar, this Bill creates a new offence. I disagree that the merging of what happens to be aspects of other laws will in any way obscure the law. Everyone admitted that the problem is that people are afraid to come forward. The very essence of what I am trying to do is to provide protection for people by putting in place the specific offence of illegal moneylending in conjunction with demanding with menace. While the measure is similar to section 26 of the Criminal Justice Act 2007, it is specifically to ensure that a person could go to court to have it make an order to the effect that the person who lent the money but was demanding with menace must stay away from him or her.
I do not refer to an aspect of the Criminal Justice Act 2007 where as a condition of bail, someone must stay away from someone else. My aim is specifically that the victim of the person who lent money, who is demanding money with menace, is beating one up, breaking one’s windows and harassing one every day or has in his or her possession one’s children’s allowance book - whatever the case is - would be protected by the Bill, even in the event of no conviction being secured. That does not happen currently. The statistics clearly speak for themselves. There have been no convictions. All speakers said that people are afraid. Sadly, despite the Minister extolling a different opinion, that he welcomes Private Members’ Bills, the reality is that he is clutching at straws in denying the merits of this one. He spoke about the merging of two similar pieces of legislation-----
Not at all.
-----into one specific offence. The victims of such offences were told today by the Minister that what they need to do is set up a group such as the one in Sligo, Communities Against Illegal Lending of Money, and that is the way to deal with the issue. The group specifically said that its three-pronged approach of educating and creating alternatives have been working but what is not working is enforcement. By the admission of those who have spoken in the debate, enforcement is not working. The fact is that people are not coming forward because they are not sufficiently protected. The Bill would give them some protection.
Not at all.
I am sad to say that-----
It only confuses the issue more.
Senator MacSharry should be allowed to speak without interruption.
-----for no reason other than the fact that it was a Fianna Fáil Bill tabled by Senator Marc MacSharry and his colleagues trying to do something that nobody else in the history of the State has done anything about. That is the only reason it has been voted down.
That is a load of nonsense.
Senator Crown and I are used to that because when we tried to do it with the Access to Cancer Treatment Bill-----
Senator MacSharry cannot accept that he-----
Senator MacSharry should be allowed to speak without interruption.
-----and the Family Home Bill the reality was the same. The people must sing for help in the context of this particular Administration because illegal moneylending is not going to get the necessary attention.
What is the point of bringing in legislation that already exists?
I again thank Members for their commendations but I am afraid they are lost on me. I hoped in earnest for genuine support for what could be a measure to help vulnerable families in Ireland but the Government has been found wanting yet again.
Question put:
The Seanad divided: Tá, 17; Níl, 23.
Tá
- Barrett, Sean D.
- Byrne, Thomas.
- Crown, John.
- Cullinane, David.
- Daly, Mark.
- Leyden, Terry.
- MacSharry, Marc.
- Mooney, Paschal.
- Mullen, Rónán.
- Ó Domhnaill, Brian.
- Ó Murchú, Labhrás.
- O'Brien, Darragh.
- O'Donovan, Denis.
- O'Sullivan, Ned.
- van Turnhout, Jillian.
- Walsh, Jim.
- Wilson, Diarmuid.
Níl
- Bacik, Ivana.
- Bradford, Paul.
- Brennan, Terry.
- Burke, Colm.
- Clune, Deirdre.
- Coghlan, Paul.
- Comiskey, Michael.
- Conway, Martin.
- Cummins, Maurice.
- D'Arcy, Jim.
- D'Arcy, Michael.
- Gilroy, John.
- Harte, Jimmy.
- Hayden, Aideen.
- Higgins, Lorraine.
- Kelly, John.
- Landy, Denis.
- Moloney, Marie.
- Mulcahy, Tony.
- Mullins, Michael.
- Noone, Catherine.
- O'Neill, Pat.
- Sheahan, Tom.
Tellers: Tá, Senators Ned O'Sullivan and Diarmuid Wilson; Níl, Senators Paul Coghlan and Aideen Hayden.
Question declared lost.
When is it proposed to sit again?
At 10.30 a.m. tomorrow.