Séamus Brennan (Dublin South, Fianna Fail)

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 operating the service. The credit union movement has been a key partner in MABS since its inception. Many local 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 also work closely with the programme.

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 level of interest rates currently being charged by some financial institutions, loan companies and legal moneylenders in cases where people have no alternative source 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 Agency 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. These provide a solid evidence base on which to develop the strategies that need to be put in place by 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, combining a continuation of local voluntary involvement with strong national leadership to ensure a high quality consolidated MABS for the future. Measures to address concerns about excessive loan charges for people on low incomes are important in this context and the MABS could play an important role in this regard. Officials of my Department have been working closely with the Financial Regulator and the Department of Finance on the detailed arrangements that might be put in place to achieve this.

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.

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