Dara Calleary (Mayo, Fianna Fail)

I join Deputy Sean Fleming in thanking our colleagues, Deputy Michael McGrath and Senators Byrne and MacSharry, for the work they have put into this Bill. It is interesting to note this Bill was taken in the Seanad last year. It was promised at the time it would be brought forward this year. However, it has not as we come towards the midpoint of this session. I endorse Deputy Sean Fleming's point that, while we welcome the Government accepting the legislation, we need to see it passed before we break for the summer. It is not too much to ask that the Bill be enacted when we break for the summer two months from now.

Up to 1.5 million people owe money on an unsecured credit product such as a credit card or personal loan. Senators Byrne, MacSharry, Darragh O'Brien and Deputy Michael McGrath have introduced a suite of measures such as family home protection. While there is a significant focus on mortgage debt, we have a major problem with unsecured debt. This is the area rogue operators are targeting and which our legislation is trying to regulate. Conor Pope in The Irish Times described the field of debt management as:

A less exciting version of the Wild West and there are no rules governing the dozens of companies which have set up in recent years offering to help people scale the personal debt mountains they have created through a combination of reckless borrowing and reckless lending.

We all know the advertisements for these companies which are generally targeted at a UK audience but are relevant here. Unfortunately, in recent months with the publication of the personal insolvency Bill, a new trend of advertisements is running, claiming the Government insolvency Act will wipe 75% off one's debt. These are promises that cannot be achieved. It is not just politicians saying this but MABS. MABS, a fantastic organisation and the unsung hero of dealing with the carnage of people's personal debt stories, has stated it would be extremely unusual, if ever, that debtors with personal debts achieve write-offs of this scale.

Various consumer credit codes are in place for financial institutions contacting individuals, but these are really only there in spirit. When a person is put under pressure about unsecured debt by a financial institution, he or she will seek some relief from a debt adviser. Unfortunately, there are some unscrupulous companies in this space, those that we are trying to put manners on in this legislation, which will feed that need. While the consumer is looking for short-term relief, unfortunately due to the lack of regulation, these advisers will only add to the consumer's debt burden.

In the case of Home Payments Limited, the consumers had their cash cleaned out, leaving them exposed to further debts with utility and other companies for which they had signed payment arrangements, thus compounding their problems entirely. The difficulty with Home Payments was, because it provided the service under the radar for many years, the age profile of those affected was older. Many of those affected had no capacity to get their money back or pay their bills. We surely should have learned from this. As Deputy Sean Fleming said, it happened last summer. With the reams of financial legislation introduced in this House since September, we should be able to put in some checks and balances in the debt management advice area.

When the history of the past ten years is written, part of it will deal with legislation and the protection it afforded. We have already discussed banking regulation or the lack thereof, and everybody would agree on the matter. It was not just an Irish problem as it was evident across Europe and the world. We have a chance to start putting in place regulation so we do not return to this scenario in ten or 15 years. God forbid this crisis would ever recur to this magnitude but if any crisis comes about, there should be a protection in place for future borrowers and consumers from a complete lack of regulation in the bank or in this sector. We have a chance, before this sector takes complete hold of people's lives and futures in this economy, to regulate it, and we should take that opportunity quickly.

We do not know how many hundreds of families around the country tonight have been sold a pup by signing up to arrangements made by debt management companies, paying interest rates way in excess of what they should be in a completely unregulated set-up. There is no consumer law or prohibition on consumer contact in this regard. We do not know where these people will go if a company decides to close shop, and we could be leaving families and people exposed to debts from utilities, credit cards and banks; essentially, they would go back to square one.

In January, the Minister for Finance, Deputy Noonan, stated he had received advice from the Central Bank and agreed that debt management and advice service firms should be subject to regulation. He asked his officials to prepare the necessary legislation, which would be brought forward as a Committee Stage amendment to the Central Bank (Supervision and Enforcement) Bill 2011. That did not happen and we have had to force this Bill on the agenda tonight to try to elicit some action.

I refer to Deputy Fleming's proposal, and the entire protection it affords, which we can see through if we want to. Unfortunately, more and more people will seek these services. We are looking for every debt management adviser, DMA, to be subject to regulation by the Central Bank and to be required to have an authorisation. We include a pretty tight definition of a DMA, which includes people offering advice on a person's credit or debt or providers of household budgeting services. Fees should be laid out before entering into an arrangement, and the fee for the service should be laid out in a clear and understandable fashion for everybody. Debt management companies should inform all potential clients of the services offered by the Money Advice and Budgeting Service, MABS, which is a public service that does fantastic work. Those services should be made available to everybody. As a House, we must agree that MABS needs more resources in the form of people and funding. The DMAs should be prohibited from handling client moneys, and client money would be protected by keeping it out of the equation. The Central Bank should publish a code of practice concerning DMAs within six months of the enactment of the Bill, and there is a range of penalties outlined in the Bill.

If we can get through Committee Stage of this, it would send out a very strong signal that we will not tolerate cowboy or wild west behaviour and will instead offer protection to those people who are under a significant burden of personal debt. As Mr. Conor Pope mentioned, the less exciting version of the wild west should get a sheriff.

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