Michelle Mulherin (Mayo, Fine Gael)

I am grateful for the opportunity to contribute on this welcome Bill. I also welcome the Minister's approach, which is to consider the heart of what the Bill is trying to achieve, namely, greater transparency. This transparency would serve to make banks, insurance companies and so on afraid of doing the wrong thing. From the reports of and cases dealt with by the Financial Services Ombudsman, we know that the banks' behaviour sometimes leaves a great deal to be desired.

When we consider financial services in recent times, the banks and their reckless lending and sharp practices, including overcharging, come to mind. It is good that the consumer, who is always the weaker party when faced with the might of large institutions such as banks and insurance companies, has an avenue to seek redress without going to court and that justice is served by the ombudsman's office.

The ombudsman addresses one sector in particular. Although we often discuss the most obvious aspect, namely, the banks and insurance companies and people's concerns in their dealings with same, moneylenders also fall within the ombudsman's remit. This significant problem needs to be addressed if the ombudsman is to be empowered to take appropriate action. By all accounts, including my own research, it is fair to say that the number of people resorting to moneylenders is increasing. An estimate of the past two years places that increase at nearly 30%. It is difficult, if not impossible, to keep tabs on unlicensed moneylenders, but it is estimated that approximately 200,000 people resort to moneylenders.

The ombudsman's 2010 report contains a breakdown of the types of complaint received. There were only 15 and 13 complaints about moneylenders in 2009 and 2010, respectively, compared with thousands of complaints against banks and insurance companies. Given the number of people borrowing from moneylenders, this begs the question of whether everything is running smoothly in that sector. Judging by my experience, it is not. The first time I encountered a moneylender's agreement was in my professional capacity as a solicitor. I ordinarily dealt with loan packs in respect of house mortgages. I was approached by a lady involved in a moneylending agreement. I nearly died of shock when I saw the APR on her loan. For example, if it had been €300 that she had borrowed, she would have repaid €400. This was an unsustainable APR.

For many, moneylenders are the last resort. People take out loans at exorbitant interest rates and repay them over short periods. They take out further loans to keep up with their repayments despite this being illegal. In many instances, the way people are dealt with by moneylenders is questionable. People are under a great deal of pressure from moneylenders, but many suffer silently. We cannot allow these types of interest rates to be charged when secured borrowings attract lower rates.

The people in question are the most vulnerable in society. We need to curb this situation. People in financial distress will look for the mercy of the State through, for example, community welfare officers and others. Moneylenders approach people's houses ahead of special events, such as christenings, Christmas, birthdays, etc. I would prefer people to go through the formality of borrowing from credit unions. A veil of secrecy and fear surrounds a great deal of moneylending, albeit not the whole, and people are in a cycle of poverty because of it. The Minister should address this issue in whatever way he can. Those borrowing from moneylenders are not the sort of people to march outside the Dáil. They are in mortgage arrears. The scale of their borrowings is significant to them, but they might only have borrowed €500, if not €300, to keep them going. These borrowings will not solve their problems, as they will still need to look to the State for assistance. Something is wrong with the way moneylenders are allowed to operate. People who are suffering and at their mercy are forgotten. Appropriate action needs to be taken.

Many people do not know how to manage money. One is not born with that knowledge. Youngsters in secondary school would benefit from classes on how to budget, borrow and balance books. The idea that people could buy now and pay later was a part of the lending craziness. Unfortunately, some people are paying in a terrible way.

I commend the Money Advice and Budgeting Service, MABS. For many people, MABS is a gift from God. When people cannot manage their finances and a great deal of pressure is placed on them by lending institutions or moneylenders, they feel powerless to face up to their situation and their problems keep mounting. MABS is a lifeline for many people and it should be as well resourced as possible. Helping these people is a difficult job. I commend everyone involved.

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