Charles Flanagan (Laois-Offaly, Fine Gael)

I am pleased to introduce, on behalf of Fine Gael, the Central Bank and Financial Services Authority of Ireland (Protection of Debtors) Bill 2009 to the House today, which is designed to regulate debt collection businesses and imposes a burden on persons engaged in the collection of money and debt to register. By so registering, this will introduce a system of vetting by the Garda Síochána before such persons can operate as debt collectors to ensure the business of collecting money is regulated in an acceptable way in a democratic country. It is an important and necessary piece of legislation and a Bill which places the protection of the citizen on a priority footing.

For some time I have endeavoured to convince the Government, the Minister for Finance, Deputy Brian Lenihan, Minister for Justice, Equality and Law Reform, Deputy Dermot Ahern and the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Mary Coughlan, that it was necessary to take appropriate action to regulate debt collection in order to protect vulnerable debtors. People have visited my clinic, having been threatened by known criminals engaged in the debt collection business. People have described how their property has been vandalised and they have been assaulted. People are afraid and vulnerable. They are fearful to make a complaint to the Gardaí Síochána. They have been let down by the Government which has turned a blind eye to their plight.

We have no system of regulation of debt collectors. A comparative analysis with our UK counterparts shows we are somewhat alone in this regard. In the UK debt collectors are licensed by the director general of fair trading under the Consumer Credit Act 1974. In the US debt collection agencies are regulated by state and federal government, and the latter is catered for in the Fair Debt Collection Practices Act. The absence of any regulation in this State means anyone can set up a debt collection agency and there are no rules as to how these people can operate. Debts can also be sold, sometimes without the creditor's knowledge. With more people owing more money, thanks to the economic collapse which has been presided over by the Government, debt collection will become a more profitable business for some. We are seeing that in anecdotal evidence on a weekly basis.

I do not have a problem with saying individuals and citizens should honour their debt obligations; of course they should. However, debtors, citizens and members of the public should be protected by law from debt collection methods that overstep the bounds of acceptable pressure and duress, which is what we are currently seeing. A reasonable person might expect a Government to do everything it should to make it difficult for criminals to go about their business, while at the same time doing all in its power to protect and uphold the common good.

This Government seems to take the opposite approach. It is as if its core constituency, whose rights it seeks to vindicate, are the minority criminal fraternity, rather than the law-abiding majority of the citizenry. We have a situation where almost 90% of gangland gun murderers remain at large and where a handful of gangland criminals in prisons continue to run their empires from behind bars with an assortment of mobile phones and other advanced technological devices at their disposal.

We have a situation where paramilitary criminals in Portlaoise dine on the finest of food while unemployed professionals queue for care packages on Church Street, not 200 m from the prison. We have a situation where known drug dealers escape prosecution and have little trouble getting passports and haulage licenses, while legitimate entrepreneurs are choked by regulation and red tape. We have a situation where criminal debt collectors are neither vetted or monitored, but can set up a business with ease and threaten, intimidate, vandalise and assault debtors to extract money from them.

We would like to see a rebalancing of the justice system in favour of the law-abiding citizen. It is essential that there be a programme of vetting for those engaged in the debt collection business. Debt collectors have a most responsible role. They come to people who are at a low ebb and are very vulnerable. Debtors are often easy to intimidate and exploit as they are under a lot of stress, not only themselves but their families. I know this. I have had these people come to my clinics and tell me first-hand about the terror they endured at the hands of criminal debt collectors and how they were afraid to go to report the matter to the authorities.

This problem has worsened significantly since the economic downturn. Well known builders have been assaulted. There were 276 people jailed last year for failing to repay loans to banks and other financial institutions, comprising 256 men and 20 women. The average sentence was 27 days, but one person was forced to spend 90 days inside our prisons. In comparison, 194 were jailed for failing to repay debts in 2006. We can see a graph quite plainly, it is rising and very little is being done about it. It is estimated loan defaulters account for 3% of all offenders imprisoned each year.

In recent months, the debt collection sector has grown, with eastern European mafia getting involved in what is now considered a lucrative field for criminals, where felons and shadowy characters are able to take up to 25% of the money they squeeze out of people, which is known as commission.

One particularly well known criminal drug trafficker - I am reluctant to name names when people are not here, but I refer to Martin Foley - glories in his criminal connections. He has used his criminal moniker as part of his debt collection company's title. He has his white van and travels up to people's doors, sometimes at night. He parks the van in such a way that people see the livery on the side of the van, which reads Viper Debt Recovery and Repossession Service Limited, and in case anybody might not recognise him or know who he is, he asks, "Do you not know who I am? There is my van. Look at my name. Now do you know who I am?"

There have been widespread reports about the "Viper's" debt collection activities in the midlands and south east, yet the authorities are doing little to relieve the burden and stress on the individuals who have had occasion to meet this man in recent times. I have drafted a Bill which is aimed at protecting debtors from people like the "Viper". Before elaborating on the contents of that Bill, I ask that the Minister for Justice, Equality and Law give his views on reports that one in three bouncers and private security personnel, all of whom are supposed to be vetted, have slipped under the radar. That amounts to approximately 7,500 people licensed to work in these jobs who have not been vetted by the Garda in spite of legislation passed in this House in recent years. In the case of foreign security checks being produced, what action is being taken to verify their authenticity? There is little point in having a vetting procedure in place and then allowing it to become dysfunctional or not used. Constant monitoring of the service is required to ensure it does what it was designed to do and to ensure that criminals are not working in the security industry in the State.

As has occurred in the area of private security companies, regulation of the debt collection industry will reconcile any ambiguities within this developing industry and will ensure the transparent, fair and efficient operation of debt collection agencies. The Private Security Authority has sought to licence an estimated 20,000 individuals from a previously unregulated environment and in so doing also requires that individuals undergo training and must submit their details for criminal record checking. In 2007, it revoked four licences and suspended two persons. It made 11 prosecutions against unlicensed contractors and in one case a company was fined €25,000. Notwithstanding the loophole that has emerged in respect of foreign police vetting certificates, the PSA's work has been very important and should be built upon. At the same time it should be reviewed given the type of loophole that is beginning to emerge where persons are working in the industry without being vetted. There is a difficulty in regard to vetting that needs to be examined with a view to improving matters.

Recently, a constituent sought a vetting clearance to apply for a job in the security industry in the United Kingdom. He was required under law to produce an appropriate vetting certificate but he could not get one. He had to proceed by way of affidavit that he had never been involved in any criminal activity, which is a form of self-regulation that has its problems and should not be encouraged. In this case the individual had no choice but to produce an affidavit or he would not have even got an interview. That issue needs to be dealt with.

The allocation to the PSA from the justice Vote in 2007 was €2.7 million. The PSA generated €2.3 million in licence fees, and the amount was credited as appropriations-in-aid to the justice Vote. That is a system that is clearly capable of paying for itself, which is another incentive to broaden the remit of the PSA to ensure we do not have the type of loopholes that are emerging.

I wish to outline the provisions of this Bill. The purpose of the Bill is to regulate debt collectors so they must register with the Financial Regulator and be vetted by the Garda Síochána before they can operate in Ireland as a licensee retrieving both consumer and commercial debt. Ireland has no system of regulation for debt collectors, unlike many European Union countries. As a result, anyone can set up a debt collection agency and there are no rules as to how they should operate. Debts can be sold on without a creditor's knowledge. With more people owing money, debt collection will become a more profitable business. Members of the public should be protected by law from debt collection methods that overstep the bounds of acceptable pressure.

The Bill will establish a regulatory framework in which a debt collection regulator under the remit of the Financial Regulator will reconcile any ambiguities within this developing industry and will ensure the transparent and efficient operation of debt collection agencies. The main function of the debt collection regulator is to issue licences to suitable applicants once they have supplied all relevant documentation, including a certificate of clearance from the Garda Síochána and a tax clearance certificate from the Revenue Commissioners. A licence will issue on a two yearly basis. It is the right of the regulator to refuse, revoke or suspend a licence at any time if deemed fit and for good reason.

The Bill also obliges licensees by law to notify a debtor and the regulator in writing if a debt is to be sold, transferred or assigned for value. Debt collection can, unfortunately, involve the exertion of pressure on the debtor. There have been media reports on collection tactics employed by some debt collectors to retrieve funds due and owing. There is also evidence that persons with criminal backgrounds are operating in this industry. Debtors feel intimidated, harassed and threatened. The Bill provides for complaints by debtors, made in good faith, to be investigated by the regulator against a licensee. If the complaint is upheld the licensee may have his or her licence suspended or revoked. A licensee must notify the regulator if he or she is convicted of an offence or if there are proceedings for an offence pending if charges have been brought.

Only persons of good and sound character and repute may engage in the debt collection business. I have met with persons in the industry who have been engaged in this work for many years. They have nothing to fear. They are supportive of the legislation because they feel the type of regulation envisaged is in line with best international practice. They feel the business in which they have been engaged for many years has become sullied and tarnished by the activities of a few in recent times.

Section 1 provides that the Act shall be known as the Central Bank and Financial Services Authority of Ireland (Protection of Debtors) Act 2009. Section 2 is the interpretation section. Section 3 provides for the approval of the Houses of the Oireachtas for any regulations made by the Minister under the Bill. Section 4 is a technical amendment which provides that the Irish Financial Services Regulatory Authority - now the Financial Regulator - shall encompass the office created by the Bill.

Section 5 amends the Central Bank Act to provide for the establishment of the regulator of debt collectors under the auspices of the Financial Regulator. This section employs a similar structure to the Registrar of Credit Unions under the same office and provides that the regulator has the power to issue licences to persons, partnerships or companies that are planning to operate as debt collectors.

Section 6 provides for the system of application to the regulator for a licence to operate as a debt collector. This section provides that the regulator may request certain background information, including Garda Síochána vetting, to establish that the applicant is a fit and proper person to operate as a debt collector. If the person is not deemed fit a licence will not be granted.

Section 7 provides for the grant, refusal or revocation of a licence to an applicant by the regulator. A licence shall remain in force for a period of two years before it needs to be renewed. The regulator may refuse to grant a licence in circumstances where he or she believes that to grant the licence, or allow an existing licence to continue to be in force, would be contrary to the safety and welfare of a person. Section 8 provides for the renewal of licences.

Section 9 provides that an applicant for a licence under this Bill must produce a current tax clearance certificate before a licence can be issued and the tax clearance certificate must remain valid, or be replaced by a new certificate, for the term of the licence. Section 10 provides that certain documents must accompany the application for a licence. Section 11 provides that an applicant for a licence, or a holder of a licence, must notify the regulator of any prior conviction or any conviction they accrue while in possession of the licence.

Section 12 provides that the regulator may seek information from the Garda Síochána in respect of any applicant or holder of a licence. Section 13 provides for the revocation or temporary suspension of a licence in circumstances where the licensee is found to have supplied misleading information to the regulator or is, in the opinion of the regulator, no longer a fit person to hold a licence. Section 14 provides that the regulator must notify the applicant or holder of a licence of any refusal, suspension or revocation of a licence and prescribes the form for such notification. Section 15 provides for appeals of a decision of the Regulator.

Section 16 prohibits the sale, transfer or assignment of a debt without the prior written consent of the debtor. This is designed to enhance transparency and to ensure debtors have full knowledge of who owns their debt, and to whom they are ultimately indebted. A debtor may not unreasonably withhold his or her consent. This is very important in the context of the "Viper" Foley and his cohorts, and of people who can buy debt in pubs for a slice of the debt that is ultimately collected. People can have no idea of the person or group with whom they are engaged in the transaction, and privity of contract appears to have no place in such an arrangement.

Section 17 provides that the regulator must be notified where a debt is sold, transferred or assigned. Failure to do so is an offence under section 19. Section 18 provides that a person may make a complaint to the regulator about the conduct of a debt collector. This provides an additional layer of protection for a debtor who may not wish to go to the Garda Síochána or who feels otherwise intimidated. The regulator can then conduct an investigation into the complaint, including power of entry and inspection of the debt collector's premises, and can impose certain sanctions on the debt collector.

Section 19 deals with offences committed under the Act. There is a scale with three levels of offences that can be committed under the Bill. The first level is administrative offences, and the Bill makes it an offence to operate as a debt collector without a licence, or to fail to provide the regulator with the requisite documents or notifications under the Act. The second level of offences deals with misrepresentations made by a debt collector to a debtor. This is very important because many debtors may have limited information about court processes and legal systems and this should not be exploited by debt collectors. As such, it is an offence to suggest that a document is a legal document or has some official capacity which it does not have, in order to coerce the debtor to discharge the debt more quickly. I have recently seen some good impressions of documents purporting to be from the court, some of which even bear a harp and the stamp of the High Court, but which are issued from premises that have absolutely no relationship with the courts or any agency of the State.

I ask the Minister of State to allow the Bill proceed to Committee Stage. I am not holding my breath, because the record of the Government is not very good in this respect, but if the Government feels there are defects that might be important or there are improvements that can be made, we can thrash them out on Committee Stage.

The absence of a vetting system for debt collectors is a weakness in our justice system. It is a gap that is overlooked by the Government, and turning a blind eye plays straight into the hands of those shady debt collectors who are criminals. Inaction on this lets down the people that the Government should be anxious to help, such as the vulnerable who have fallen into debt through the collapse of their businesses or unemployment and who are being buffeted violently by the stormy winds of the recession. The Bill is straightforward and proposes a system that would fit in easily to existing mechanisms and is likely to generate enough income to be self-financing. Most importantly, our proposed vetting system will help keep communities safer. I hope all parties in this House, particularly the Government parties, will see the merit of these proposals. I commend the Bill to the House.

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