Select Committee on Enterprise and Economic Strategy díospóireacht -
Thursday, 19 May 1994

SECTION 8.

Mr. M. McDowell

I move amendment No. 59.

In page 16, subsection (1), between lines 11 and 12, to insert the following:

"provided however that the provisions of this subsection do not apply to a person who holds a current written authorisation under the provision of section 82 (4) and who, apart from the business to which that authorisation relates, is not otherwise engaged in the business of being a credit intermediary.".

The amendment proposes to make it clear that a credit intermediary is not a person who holds a written authorisation under section 82. It would be impossible for licensed moneylenders to have effectively a class of credit intermediaries operating between them and the public. It is necessary, therefore, to make it clear that a person who holds an authorisation from a licensed moneylender is not a credit intermediary, even if the person is paid on the basis of commission for his or her work.

Mrs. O'Rourke

The Deputy is referring to the intermediary between the authorised holder of the licence and the member of the public to whom the loan is given.

Mr. M. McDowell

Yes. Otherwise such intermediaries would require a tax clearance certificate. It would create chaos for licensed moneylenders if the people to whom they furnish written authority and retain to collect money door to door fell into the category of credit intermediaries. I appreciate some people may argue they would not be credit intermediaries because they do not carry on the business of arranging finance, but on another view they are. This area poses a problem unless there is a cast iron guarantee on the Statute Book that holders of an authorisation to collect money, on behalf of moneylenders, are not intermediaries, even if they offer or arrange loans on the doorstep.

Mrs. O'Rourke

I see the point. The licensed money lender pays a fee of £1,000 and, in addition, a fee of £500 in each district outside the area in which he has obtained his licence. He then employs people to physically disburse and collect the money on the doorstep. I reflected on what was put to me and, on balance, I thought it would make for more orderly business to accept the amendment. We want clarity in such a hugely complex Bill. I saw this amendment as a way of clarifying the matter and I am disposed to accept it.

Mr. M. McDowell

I thank the Minister. I should indicate to the Committee, lest anyone think I am not declaring my interest in the matter, that I advised the consumer credit industry on this Bill. I did say so on Second Stage.

Mrs. O'Rourke

I understood that. I thought that we might make it even more difficult for the consumer to know with whom he was dealing and that this amendment was the best way around that.

Amendment agreed to.

Chairman

We now come to amendment No. 60 which, with amendments Nos. 61 and 62 form a composite proposal. With the agreement of the committee we will take amendments Nos. 60, 61 and 62 together. Is that agreed? Agreed.

Mrs. O'Rourke

I move amendment No. 60:

In page 16, subsection (5) (b), line 27, to delete "and".

This is to make it clear that an authorisation to a person to engage in the business of being a credit intermediary will contain the name of the credit provider for which he is an intermediary. That relates to amendments Nos. 60 and 61. The purpose of amendment No. 62 is to ensure that the Director of Consumer Affairs or his or her officers will know the name of the undertakings for which each credit intermediary is acting.

Mr. R. Bruton

Given that Deputy McDowell's amendment No. 59 was accepted, does that mean that the authorisation of the credit intermediaries acting on behalf of a moneylender will not show on whose behalf they are acting?

Mr. M. McDowell

They have to have written authority from the moneylender.

Mrs. O'Rourke

That is covered in another section. This is so that the Director of Consumer Affairs, when asked to carry out an investigation will know for which company the credit intermediary is acting. It is specified in the bill that the holder of the moneylenders licence "shall display a copy of the licence in a prominent position "and" shall issue, in writing in such form specified by the Director, to any person engaging in the business of moneylending on his behalf including collecting repayments, authorisation to so engage or collect signed by, or on behalf of, the licence holder."

Mr. R. Bruton

What the Minister is saying is that the Director of Consumer Affairs can specify what is in subsection (5) by order and that it will not be in the legislation. We are leaving it to the Director of Consumer Affairs to specify the form of authorisation carried by the moneylender intermediaries.

Mr. M. McDowell

The moneylenders have their own special authority under section 82 (4) which requires their authorisation to be signed by the moneylender.

Mrs. O'Rourke

This is for the convenience of the authorised officers in carrying out their investigations.

Mr. R. Bruton

I do not see the requirement for the moneylender to sign.

Mr. M. McDowell

It is at page 47, line 34.

Mrs. O'Rourke

The moneylender is the "parent" so to speak.

Amendment agreed to.

Mrs. O'Rourke

I move amendment No. 61:

In page 16, subsection (5) (c), line 28, after "holder" to insert ",and".

Amendment agreed to.

Mrs. O'Rourke

I move amendment No. 62:

In page 16, subsection (5), between lines 28 and 29, to insert the following:

"(d) the name of each of the undertakings for which he acts as credit intermediary.".

Amendment agreed to.

Chairman

Amendment Nos. 63 and 64 are related and can be discussed together.

Mrs. O'Rourke

I move amendment No. 63:

In page 16, subsection (6) (d), line 40, before "Revenue" to insert "current".

This is to ensure that even though the practices in the offices of the Revenue Commissioners may change, the legislation will be elastic enough to cope with such changes.

Mr. R. Bruton

Is it reasonable to refuse to renew a licence solely on the basis of a tax clearance certificate? Normally the onus is on the Revenue Commissioners to pursue a person for tax; the applicant must be registered for tax and the Revenue Commissioners must know that he has an authorisation to be a credit intermediary. Is it overdoing it to say that his tax affairs must be up to date in every respect? This is similar to the debate we had about casual trading. Effectively we are saying that people could be denied the right to continue their business because they are out of line in one element of their tax affairs. Is it not the job of the Revenue Commissioners to pursue a person if they are £1,000 out on some return?

Mrs. O'Rourke

The question is broader. In regard to casual trading, we were able to grant some amelioration. The stipulations of the Revenue Commissioners on tax-worthiness are standard in all legislation and regulations. Is the Deputy saying that it is enough to stop a person initially getting a licence to carry on business and not prevent them thereafter?

Mr. R. Bruton

That is basically what I am saying. I would expect that once a person is registered for tax it is up to the Revenue Commissioners to use the powers they have to pursue him. This requirement for a tax clearance certificate is being slipped into all legislation. Effectively people can be put out of business at the annual renewal date if even a comma is out of place with regard to their tax affairs. I wonder if that is not a bit draconian, especially since we have extended the powers of the Revenue Commissioners — I do not think that anyone would feel that the Revenue Commissioners do not have effective powers to pursue.

Mrs. O'Rourke

When we employ people as contractors or sub-contractors we require that they produce the relevant tax clearance certificate before they can receive any grant. The same applies to third level education grants and anything that involves Revenue.

Mr. R. Bruton

A licence to continue trading is different from one contract.

Mrs. O'Rourke

We cannot on the one hand condemn the black economy and seek to bring it into line and on the other hand seek to ameliorate its position in any way. It seems that the production of a tax clearance certificate in order to continue in business is necessary.

Mr. R. Bruton

I do not want to make a meal of this but to argue that one cannot continue in business without a tax clearance certificate is quite an invasion of rights which would not apply to any normal trader. We introduced it in to cover those dealing with the public sector in getting public contracts. We are now extending the principle further to provide that if a person is in tax arrears he will be denied the right to continue in business. Have we really thought out this matter? Perhaps we are tilting the balance very much in favour of the Revenue Commissioners? Any business could fall into arrears by a few thousand pounds and in those circumstances Revenue will most likely fail to issue a tax clearance certificate. Should we be so rigid about this issue as to put a person out of business once they get into tax arrears?

Mrs. O'Rourke

We are saying the director "may" refuse. Governments make rules and hope that people live by them. The term used is "may refuse to grant an authorisation". That is sufficient to cope with the type of situation referred to by the Deputy.

Mr. R. Bruton

In practice it is not sufficient because once Revenue refuses a certificate the Director will not be in a position to override its decision on the grounds that it has acted unreasonably in adjudging arrears of £1,000. Although "may" is the legal term used, in practice it means "shall". We have dealt with this issue in terms of casual trading, and I know the circumstances are very different in that case, but the point is worth making that where someone is authorised to do something, they have a right to continue in business whereas where they apply for a contract or a grant, that is only a tiny element of their overall operation. Perhaps we can come back to this matter on Report Stage. These provisions seem to slip in all the time and I wonder have we fully thought out what they mean for businesses who, through no fault of their own, fall behind in their tax payments.

Mrs. O'Rourke

PAYE taxpayers do not have a chance to fall behind because we pay our tax as we earn. It is reasonable to expect that people who wish to engage in business should pay their taxes.

Mr. R. Bruton

That is not in dispute. The Revenue Commissioners have great powers to pursue businesses that are in arrears of tax, but should we go further and provide that if the Revenue Commissioners cannot issue a certificate that all taxes are paid up to date the person must cease to be in business? That is going a little further than saying that each business must honour its tax obligations. On a certain date each year if a business is not up to scratch the shutters can come down, and that is what concerns me at a time when we all talking about the need for enterprise. Revenue has powers to pursue the equity issue and perhaps we should not try to do so through the licensing of traders.

Mrs. O'Rourke

I understand what the Deputy is saying, but in the interests of good behaviour and efficient business operations, these provisions should be included.

Amendment agreed to.

Mrs. O'Rourke

I move amendment No. 64:

In page 16, subsection (6) (d), lines 41 and 42, to delete "dated within 3 months prior to the date of application".

Amendment agreed to.

Chairman

Amendment No. 65 in the name of the Minister. Amendments Nos. 209 and 249 are related and, by agreement, the three amendments will be taken together.

Mrs. O'Rourke

I move amendment No. 65:

In page 17, subsection (8), line 14, to delete "7 days" and substitute "10 days of receipt of the notification".

Initially a period of 14 days was provided for and that was reduced to seven days. All the timings are not in line throughout the Bill but they are grouped together. This amendment proposes to delete "7 days" and substitute "10 days of receipt of the notification". The manner in which the decision is to be notified is contained in subsection (11). Amendment No. 209 proposes to insert "of receipt of notification" and amendment No. 249 proposes to insert "of receipt of notice".

Mr. R. Bruton

I am not sure we should have agreed to take all these amendments together because we are jumping from credit intermediaries to moneylenders.

Mrs. O'Rourke

Who grouped the amendments?

Chairman

The Bills Office. I have no problem with taking the amendments separately.

Mrs. O'Rourke

That would be more acceptable.

Amendment agreed to.

Mrs. O'Rourke

I move amendment No. 66:

In page 17, between lines 21 and 22, to insert the following subsection:

"(10) In an appeal under this section the Director shall not be awarded or be ordered to pay costs.".

The purpose of this amendment is to ensure that the Director will not be inhibited from refusing to grant an authorisation or a licence for fear of the implications of costs being awarded against him in the event of a successful appeal to the court by an applicant against the refusal to grant such authorisation or licence. Equally, an applicant who has been refused an authorisation or licence should not be inhibited from appealing against the Director's decision for fear of costs being awarded against him. The amendment is to allow for freedom of the right of appeal without fear of costs.

Mr. M. McDowell

Does that apply to an appeal to the High Court on a specified question of law? If an intermediary finds himself at a three day case in the High Court and the case is successful what would be the position?

Mrs. O'Rourke

The Deputy and his colleagues would be in receipt of fat fees. We did not differentiate between the courts.

Mr. M. McDowell

Will the Minister consider that matter? In the Circuit Court a straightforward decision would be made by the judge, but a complicated question of law may arise which would be difficult to decide.

Mrs. O'Rourke

We dealt with this matter in the interests of justice and equity.

Mr. M. McDowell

I think what was in mind was that the appeal would be made to the Circuit Court. I would be surprised if the Director thought he should be allowed bring a person to the High Court for a construction of a statute and then say, "I am sorry, there is no redress".

Mrs. O'Rourke

Presumably the appeal would be made to the Circuit Court, but I will consider the matter.

Amendment agreed to.

Section 8, as amended, agreed to.