Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I know that this is an area in which the Deputy is particularly interested and it was the subject of a Private Members' Bill he introduced. We had a number of debates about this previously and I am pleased that the commitments I gave on that occasion are being fulfilled now. The Deputy's amendment relates to debt-management companies and I have also tabled a series of amendments.

Deputies will be aware of the Private Members’ Bill I mentioned that was discussed in the House last year. The Government promised that legislation would be brought forward to provide for the regulation of debt management and debt advice companies. This is now being done.

Part V of the Central Bank Act 1997 will be amended to provide for a regulatory regime for the services of debt advice and debt management firms that currently fall outside existing regulatory regimes. This will be achieved by incorporating a new category of regulated business into the existing regulatory framework in Part V of the Act, thereby extending the application of the provisions of financial services law that currently apply to regulated financial service providers to debt management and debt advisory firms. A debt management firm is defined in the amendment as a person who, for remuneration, provides debt management services to one or more consumers other than an excepted person. A consumer means an individual acting otherwise than in the course of business or a micro enterprise within the meaning given by Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises. Debt management services and excepted persons are also defined in the amendment.

It is also proposed to amend the existing definition of "money transmission services" in Part V of the Central Bank Act 1997 in order to clarify and make it clear that money transmission services provided by such debt management firms fall to be regulated.

The Bill also provides for transitional arrangements to apply to existing debt management firms. Such firms will be required to apply to the Central Bank no later than three months after the commencement of the Act for the appropriate authorisation.

The legislation reflects most of Fianna Fáil’s Private Members' Bill. The structure may differ in that it has been incorporated into Part V of the Central Bank Act 1997. The benefits of this structure is that existing provisions in Part V on the imposition of conditions, revocation of authorisations etc. will apply to the firms that will be covered by the new regime. The introduction of this new category of regulated business will subject such firms to the powers and provisions contained in other legislation relating to regulated financial service providers, such as fitness and probity powers in the Central Bank Reform Act 2010, administrative sanction powers under the Central Bank Act 1942 and the supervision and enforcement powers of the Central Bank (Supervision and Enforcement) Bill 2011 when enacted.

Deputy McGrath has proposed to insert a new section 36B making it an offence for a person to hold themselves out, or claim to be, a debt management provider without authorisation. The legislative proposal, if adopted, will provide that the provision of debt management services without an authorisation will be prohibited by virtue of section 29(1) of the 1997 Act. While that is the case, the activity of holding oneself out or claiming to be performing an activity is not the same as performing that activity, and holding oneself out, or claiming to be the holder of an authorisation is not the same as performing the activity. Thus the prohibition contained in section 29 would not prohibit these related types of related conduct. My officials will examine this and discuss the matter with the Office of the Attorney General.

The proposed section 36C(8) would make it an offence to provide false or misleading information with respect to an authorisation. This proposed prohibition does not appear to be contained within either the legislative proposal, or within the existing authorisation regime provided for in Part V. The 1997 Act appears to penalise this conduct through provisions such as section 31(2)(c), which would allow an authorisation to be refused where such information is provided; or section 36A (1)(c), which would allow an authorisation to be removed in such circumstances. My officials will examine this and discuss the matter with the Office of the Attorney General.
The proposed section 36G 3(a) requires an authorised debt management adviser to advise the consumer in writing of the existence, role and function of the Money Advice and Budgeting Service. This not the appropriate place for this provision. These are private companies and it would be disproportionate to place this requirement on them. There are also public bodies to advise consumers with regard to MABS and its role.

That covers most of the points. As I have said, we will have some discussions with the Office of the Attorney General between now and Report Stage.