I propose to take Questions Nos. 47, 56, 65, 70, 75, 82, 83 and 90 together.
The Money Advice and Budgeting Service (MABS) provides assistance to people who are over-indebted and need help and advice in coping with debt problems. There are 53 independent companies nationwide employing some 230 money advice staff including Money Advisors, Co-ordinators, and Administrators who deliver the service at a local level.
The credit union movement has been a key partner in MABS since its inception and their involvement and support is central to the development and success of the service. Other voluntary and statutory bodies, such as the Society of St. Vincent de Paul, the Community Welfare Service, Citizens Information Centres, Centres for the Unemployed and local authorities work closely with the programme. The National Traveller MABS which employs 4 staff, has a specific remit to provide education and promote awareness about Traveller issues. It does not provide a direct money advice service to people. Instead it supports Travellers in linking into the local MABS network.
Last year, MABS provided services to some 12,500 new clients throughout the country. The number of active cases at the end of the year was some 14,900. The demand for the service can be attributed to the increase in the availability of credit generally and to the quality of the service provided by MABS advisors.
In 2006, €16.4 million was provided to fund the service and in 2007 I have further increased the annual allocation to €17.67 million to assist the MABS in dealing with its workload. The issues that give rise to problems of over-indebtedness are highly complex.
The cost and availability of credit for people on low incomes and the barriers they face in accessing mainstream and cheap forms of credit add to the difficulties people on low incomes encounter in managing their finances. I am particularly concerned about the high level of interest rates currently being charged by some financial institutions, loan companies and by legal moneylenders in situations where people have no alternative sources of credit available to them. My concerns, in this regard, are borne out by the Financial Regulator's Report on the Licensed Moneylending Industry published last week. It shows that moneylenders may be charging interest rates of up to 188%. Most significantly, 71% of people surveyed did not know what interest they were paying on their loans.
I have held discussions with a number of interests including the Irish League of Credit Unions, the Irish Bankers Federation and the Financial Regulator about these issues. The outcome of these consultations, the latest report of the Financial Regulator together with the Combat Poverty Study ‘Financial Exclusion in Ireland' and the statistical data now emerging from the new MABSIS information system will make a significant contribution to our knowledge about the problems of debt in Ireland. They provide a solid evidence base on which to develop the strategies that need to be put in place by both the Government and the providers of payment services such as the banks and credit unions to promote greater financial inclusion in Ireland.
Proposals to establish the MABS on a statutory basis will be considered by the Government in the near future. My intention in this regard is to build on the best features of the MABS model of service to the public and to include measures to address concerns about excessive loan charges for people on low incomes. I want to combine a continuation of local voluntary involvement with strong national leadership and ensure a high quality, coordinated budgeting and advice service for the future, in particular for people on low incomes.
I envisage a number of specific actions to address some of the issues that leave people on low incomes vulnerable to high cost credit charges. The regulation of moneylending comes under the Consumer Credit Act, 1995 and the licensing of moneylenders is a statutory responsibility of the Financial Regulator. My view is that the MABS has a key role to play in informing the licensing process in these circumstances. Officials of my Department have been working closely with the Financial Regulator and with the Department of Finance on the detailed arrangements which might be put in place to achieve this.
The support structure put in place by my Department for the MABS in recent years has worked well for clients of the service, for local management and for the staff. The MABS is highly regarded and successful in meeting the needs of its clients.
I also want to take account of best practice in corporate governance for a customer focused service that provides value for money for the taxpayers' investment and meets the challenges posed by the rapidly changing face of debt in 21st century Ireland. I will arrange to have a schedule of the details of the 53 MABS services placed before the House.