Amendments Nos. 111 and 112 are related and may be discussed together.
SECTION 33.
I move amendment No. 111.
In page 27, subsection (2), line 16, before "in writing" to insert "by the creditor".
The purpose of these amendments is to ensure that the onus for informing the consumer rests on the creditor. This proposal was made by the Director of Consumer Affairs. Placing the onus on the creditor identifies the party responsible in the event of a breach of the Act.
Amendment agreed to.
I move amendment No. 112:
In page 27, subsection (2), line 18, after "informed" to insert "by the creditor".
Amendment agreed to.
Amendments Nos. 113 and 114 are related and, by agreement, may be taken together.
I move amendment No. 113:
In page 27, subsection (2), line 19, after "occurs" to insert "and".
These are textual amendments which improve the layout of the section in that they link and clarify its intent.
Amendment agreed to.
I move amendment No. 114:
In page 27, subsection (2), line 20, to delete "Provided that".
Amendment agreed to.
Amendments Nos. 115 and 116 are related and may be discussed together.
I move amendment No. 115:
In page 27, subsection (2), line 21, to delete "or" and substitute "and".
These amendments deal with banks and building societies who propose to change the terms of overdrafts. The Bill provides that such information can be made available in a statement of account or in an advertisement in a national newspaper.
It is reasonable that banks and building societies should be obliged to make such information available to the borrower. This would not be an onerous provision because most financial institutions provide their current account customers with statements of their accounts on a regular basis. As well as placing an advertisement in the national papers they should provide the borrower with such information.
The Deputy is seeking to remove the option and by so doing to copperfasten the rights of consumers. I agree with the Deputy. I am sure banking institutions will claim this is an added burden which they should not have to endure, but they can well afford to.
They are all doing this in any event. Information on interest rates is provided in the national newspapers every weekend and current account holders receive statements on a regular basis. The only problem which might arise would be in respect of a person who requires only a six monthly statement on his or her account. In those circumstances, the bank would be required to notify such people every time interest rates change.
Why not? Customers pay for their credit. I accept the Deputy's amendment.
Amendment agreed to.
Amendment No. 116 not moved.
Question proposed: "That section 33, as amended, stand part of the Bill."
Statements on overdraft accounts contain certain information on charges. For example, when a person goes over his or her overdraft limit the bank takes it on itself to charge, say, £3 for every transaction while that person is over his or her credit limit. The bank does not notify the consumer of such charges and if one queries the matter one will be told such information is made available in the bank. Does section 33 (1) (b) provide that consumers will be informed of such penalty charges? Also, should consumers be told when penalty charges are triggered?
Is the Deputy referring to the starting point for such charges?
Customers will be aware that if they exceed their limit such charges will be triggered.
Is the Deputy suggesting they should be told at the point they go over their limit?
Yes. Overdraft limits are very casual and do not involve a formal agreement.
They are tacit agreements.
People can suddenly discover that they have been over their limit for perhaps one month and incurred a few hundred pounds in charges for cheques going through the bank. Should there not be some onus on lending institutions to notify customers of penalty clauses when they exceed their limit?
In compiling this section I sought a full explanation on this matter. The section deals with lending by way of overdrafts on current accounts and requires that where a bank agrees to grant such facilities to consumers it must inform them of the credit limit, the APR and the procedure for determining such facility. The information must be confirmed in writing to the consumer within ten days of the agreement. That is understandable, but the Deputy is referring to tacit overdrafts which extend beyond three months for which the information provisions are less onerous. This section provides that such statement of accounts may be given in notices in the press whenever lending rates are amended. Section 33 (1) provides that information shall be given to the creditor when making an agreement in respect of granting credit in the form of an advance on a current account. The consumer must be informed of the credit limit applying to the overdraft, but none of that addresses the matter raised by the Deputy, namely, that customers are not notified at the point they exceed their limit and may not be able to take the necessary measures to overcome the heavy penalties imposed. The Deputy is not faulting the banks for imposing a penalty in such circumstances as they must safeguard their moneys in some form. He is suggesting that they should be informed at the point they exceed their limit, which is not fully addressed in the legislation. The Deputy tabled certain amendments and I am preparing a new section dealing with consumers, banks and charges with particular reference to removing the clause in a Central Bank Act, 1989, and inserting in this legislation measures dealing with consumer protection in respect of bank charges. Perhaps we could examine the matter when we come to deal with that section.
What the Deputy says is correct, by the time customers are informed they have exceeded their overdraft limit they may have incurred hefty costs and the Bill does not cover that. This section deals with precise, not tacit agreements, but I expect we will have an exhaustive debate later on the section dealing with bank charges. Perhaps we could deal with the matter then.
I may table an amendment in this regard on Report Stage.
Question put and agreed.