Martin Cullen (Waterford, Fianna Fail)

The Money Advice and Budgeting Service, MABS, is the main Government funded service which provides assistance to people who are over-indebted and need help and advice in coping with debt problems. There are 53 independent companies nationwide with over 230 money advice staff operating the service. Many voluntary and statutory bodies such as the Society of St. Vincent de Paul and the credit unions work closely with the programme. Last year, MABS provided services to almost 12,500 new clients throughout the country. To date in 2007, some 8,300 new clients have approached the service. The number of active cases at the end of August was 18,400.

In 2006, €16.4 million was provided to fund the service and in 2007 the annual allocation was increased to €17.67 million to assist MABS in dealing with its workload.

The issues that give rise to problems of over-indebtedness for people 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 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 recent Financial Regulator's report on the licensed moneylending industry in Ireland which shows that moneylenders may be charging interest rates of up to 188%. Most significantly, 71% of people surveyed in the report did not know what interest they were paying on their loans.

The regulation of moneylending comes under the Consumer Credit Act 1995 and the licensing of moneylenders is a statutory responsibility of the Financial Regulator. MABS has a unique and expert contribution to make, on behalf of people on low incomes, in shaping the strategies that need to be put in place to ensure greater financial inclusion. For example, MABS has a role in promoting to the providers of payment services, such as the banks and credit unions, the needs of people on low incomes, so it is easier for them to access financial services.

In line with the programme for Government I am developing proposals for a new structure for MABS geared to meet the needs of people with debt difficulties in today's society.

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