Barry Cowen (Laois-Offaly, Fianna Fail)

As my colleagues have noted, the area of debt management advice and household budgeting services is largely unregulated, and this is a growing cause of great concern among us and throughout the country. Many distressed borrowers have signed up to what seemed attractive offerings with some providers and found themselves in further financial trouble and a less secure position. We are not seeking to outlaw the debt advice industry or make it impossible for operators to function but as we have said, there are growing levels of concern about these companies and, in particular, the fees they charge and the transparency that is evident. It has been reported that some financial institutions have gone as far as to say they would not deal with many debt management companies, which is a great cause of concern and brings about the reason we are here this evening, following on from what was brought to the Seanad last year.

Currently, those offering advice are considered to be offering a customer service, as has been noted by Deputy Fleming, rather than a financial service. Consequently, they are not subject to regulation by the Central Bank and the Financial Regulator, although they can be prosecuted under consumer protection laws, including legislation dealing with misleading advertising, as mentioned by Deputy Calleary.

This Bill would bring debt management advisers under Central Bank regulation, providing for transparency in fee setting and protecting customers by prohibiting debt management advisers from handling client funds. I will deal with the Money Advice and Budgeting Service, MABS, as it is relevant to the responsibilities of the Minister for Social Protection. The obvious alternative to debt advisers is MABS, and as Deputy Calleary alluded to, its personnel are the unsung heroes in the past number of years who have worked tirelessly to deal with some crazy issues in a professional, capable and understanding manner. There are 53 independent MABS companies with voluntary boards of management employing some 277 money advice staff, operating nationwide.

In 2010, the MABS helpline took over 27,700 calls, compared to 24,737 calls in 2009, with 16,620 calls in the first half of 2011. They are the most recent figures and they indicate close to a 20% increase year on year. If that is the case, we can expect at least in the region of 40,000 calls this year. The demographic profile of MABS clients has remained relatively stable, with almost 70% social welfare recipients, growing from 63% in 2007. The majority are aged between 26 and 40 and female, with over 60% having children. The number of budget negotiable clients is increasing, which means MABS is now negotiating arrangements with creditors for a higher proportion of clients.

Recently in the Dáil the Minister for Social Protection stated she was satisfied that MABS had sufficient resources to continue to provide a high quality personal service to assist people in overcoming their indebtedness and managing their finances. Our Bill would ensure a debt management company would inform all potential clients of the services offered by MABS but in order for that to be successful and be taken in the way it is intended, additional resources must be made available to local MABS branches. Deputy Calleary mentioned this.

Although I quoted the Minister, I do not believe her comment reflects reality; the requirements of the service should be audited. Representatives should come before a committee or the Minister should come before the Dáil and state categorically that sufficient funds, services and facilities are available to the staff which will allow them to carry out the functions for which MABS is designed. Based on the figures made available to us and members of our party when we prepared this legislation, the numbers of people seeking the service are rising at such an alarming rate that they cannot be matched by levels of funding and personnel.

In supporting this Bill, I ask the Minister of State to indicate to the Ministers for Social Protection and Finance the strong message from this side of the House that additional funds and services are required at the coal face. It is incumbent on this Government, if it is as compassionate as it portrays itself to be, to implement those amendments in order to meet the needs of those who deserve these facilities. In the absence of such action, the prevalent rogue trading which forces exorbitant fees and further indebtedness on those whom they seek to represent will only continue to gain momentum. We are closing one loophole in bringing forward a Bill like this, and we would make it law for such characters to inform people of the facilities that can be availed of from the State.

For that to be practical and professional, it is imperative the Minister for Finance and the Minister for Social Protection come forward with new proposals and updated facilities, services and funds to give the service that is necessary.

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