Seán Sherlock (Cork East, Labour)

I thank the Leas-Cheann Comhairle. The Labour Party supports the Fine Gael motion. Although the motion speaks specifically to the incompetence of the Government, with particular regard to the banking crisis, it is important to speak about the lack of regulation of the money lending and debt advisory sector. In the current regulatory environment there is a coterie of so-called debt advisers who charge rates commensurate with the usurers of Shakespeare's "The Merchant of Venice". This is an outrage and a further indicator of the indifference this Government shows towards ordinary working people. This was evidenced in its recent reply to a parliamentary question I posed on licensed money lenders.

It may be said I am straying slightly from the guts of the motion but in speaking on this sector my party believes there must be a level of equity in the way a Government and a regulatory regime examine financial services. If one talks about giving powers to the Garda and the Director of Corporate Enforcement, one must also examine how those powers are divided up and to which sectors they should apply. The motion speaks of these powers applying specifically to the banking sector but my party believes it is essential that we consider the wider financial services sector.

On 27 October I asked the Minister for Finance whether his attention had been drawn to the fact that the country's largest licensed home collection money lender has acquired an additional 13,000 customers in the past year and what his plans were to introduce a system of regulation for debt collection agencies. The Minister responded:

In my role as Minister for Finance I have responsibility for the development of the legal framework governing the regulation of financial institutions in Ireland. The day to day responsibility for the supervision of these financial institutions is a matter for the Central Bank, which is independent in the exercise of its regulatory functions. The Central Bank issues licences to money lenders on a yearly basis. The Central Bank has produced a consumer protection code for licensed money lenders and under this code money lenders are required to prominently indicate the high-cost nature of the loan on all loan documentation where the APR is 23% or higher. The disclosure must take the following form, there must be a warning that this is a high-cost loan and money lenders must also provide consumers who demonstrate difficulty in meeting their repayments with information on debt counselling services such as the Money Advice and Budgeting Service which provides free independent advice and guidance.

The reply continues:

Other provisions of the code cover a range of areas including unsolicited contact and unsolicited credit facilities, handling complaints, arrears and guarantees and debt collection . . .The Deputy may wish to note that in the case of financial institutions which use debt collection firms the Central Bank has imposed requirements under its consumer protection code that offer protection to consumers. This code obliges the regulated financial institutions that it covers to ensure that any outsourced collection activity complies with the requirements of the code. This means that outsourced activity should uphold principles in the code such as the requirement for institutions to not exert undue pressure or undue influence on the customer, act honestly, fairly and professionally and with due skill and diligence in the best interests of its consumers and prohibit personal visits to or oral communications with consumers except in specified circumstances. The Deputy may also wish to note that the National Consumer Agency provides extensive information on its website and through its helpline to help consumers avoid getting into debt difficulties. The agency also provides information for those at risk of not being able to meet loan repayments.

I know of nobody who has borrowed money who has been offered such information or is even aware of their rights and entitlements. These are people who traditionally come from working-class areas, have fallen on tougher times and are borrowing from the money lender. There must be a role for the regulator in regard to this sector because not only is it under-regulated but it deals with the most vulnerable people in our society at this time.

My party sees a glaring discrepancy in the way this sector is being treated where we see a light touch approach applied. The Minister's response to my parliamentary question reflects a mish-mash type of response that does not deal directly with the problem of money lenders and how insidious they have become. At the same time, however, the regulatory regime has borne down very heavily on the credit union sector, unnecessarily so, some would argue.

In essence, we support the motion but if we are to use opportunities such as this to take a look at the regulatory regime we contend the Government must also examine other aspects of financial services. It must examine the money lending sector and ask whether it places too heavy a hand on the credit union sector. If one takes the credit union sector as an example, it is one that has never needed a bail out. This House has never debated whether the credit union sector was going into crisis because we know full well it is not, even though there may be a small handful of credit unions which have encountered serious difficulties. The regulatory response from Government, however, has been to bear down heavily on the credit union sector - unnecessarily, we contend - but not to do anything in regard to regulation of the money lending sector which adversely affects those people who are most vulnerable and therefore needs to be regulated.

We can have no faith that this Government will introduce adequate measures for the Garda or the Director of Corporate Enforcement when we see clearly from the reply to my parliamentary question that the Government is failing to legislate adequately for the money lending sector while going hell for leather to regulate the credit union sector. Money lending is a hidden sector, one that needs to be examined and that should be subject to Garda monitoring. I believe it was on 12 February last year that the Minister for the Environment, Heritage and Local Government, Deputy John Gormley, stated in a debate on the recapitalisation of AIB and Bank of Ireland that there would have to be a change in the regime such that people would have to do "the perp walk", to cite the expression he used. Nobody yet has done the perp walk and we question why there has not been progress since 12 February 2009 in that regard.

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