Pearse Doherty (Donegal South West, Sinn Fein)

No, as the Deputy is well aware, I was absent for a couple of weeks after my father passed away and I have been involved in the campaign against austerity. While he is correct about the legacy of the Fianna Fáil Party, the Government will leave the same one. Its actions in the past year are the reason people are emigrating. That said, I welcome the opportunity to debate this Bill. We, in this institution, face many problems which appear insurmountable and divisive. Occasionally, however, an issue arises on which we all agree and which should, on the face of it, be simple to fix. The regulation of debt management agencies is one such issue. It is crucial we tackle this now and do not leave it any longer. To do so puts more vulnerable people at risk of agencies which are operating as rogue agencies or are operating ineptly.

In 2009, the Law Reform Commission called for regulation of debt advisers and set out proposals on legislation for the issue. Groups like these have always existed but there is no doubt their number has increased and they have become more prominent in recent years. This is a response to the economic crisis which has seen more people struggling with the cost of living. I heard the Deputy speak of people in his constituency in Cork who are struggling to get by, and I am not sure if he was talking about his Fine Gael colleague, but he will understand that if she is struggling on €96,000 per year, then people who have lost their job and who have seen their disposable income cut by the previous Government and this Government are finding it very difficult to get by, and they have turned to these agencies to manage their debts. The previous Government not only drove most of these people into debt, but also during the 14 years in which they governed, as it watched these agencies increase and prey on vulnerable people, it refused to regulate them.

In 2010, the Department of Finance said it had no plans to regulate the sector, despite receiving submissions on the issue from financial commentators. My own colleague at the time, former Deputy Arthur Morgan, raised the agencies issue on numerous occasions, but to no avail. The money advice and budgeting service warned that debt advisers were making false claims that they could have 75% of debts written off for heavily indebted consumers . In preparing for this debate, I did a Google search of debt management companies and I saw one firm's advert stating: "The Irish Government Insolvency Act Can Wipe Up to 75% Of Your Debt". That is what these agencies are doing on the Internet: preying on vulnerable people. The Minister of State knows as well as I do that no such Act exists. We talk about false advertising, and there it is. It tries to pretend there is some type of magic solution and these agencies will solve all problems.

This issue came to boiling point under the previous Government. It was warned about it in 2009 and in 2010, yet now in 2012 it is bringing forward a proposal on it in opposition. That said, we have to leave aside Fianna Fail's attempt to rewrite history and this Government's foot dragging on the issue, and we must deal with this issue now because it is too important to delay it. The collapse of Home Payments Limited and Dunne & Maxwell, trading as Your Money, highlighted the urgent need for regulation of debt management agencies. These firms sell debt management plans to distressed consumers who are often already in crisis. Since 2009, under the European payment services directive, firms such as these should be regulated and authorised by the Central Bank. However, regulations allow firms to establish whether they should be authorised. Being authorised would undermine the profit model of such agencies which depend on hefty fees deducted from money handled for consumers.

The Consumer Association of Ireland has weighed heavily into the debate, stating it is seriously concerned at the lack of consumer protection. We know there is huge money in the debt management game. The reporting skills of some financial journalists have exposed universally high fees of as much as €750 for an upfront fee and average monthly fees of €50. If that was the only problem, we might be able to deal with it, but the risk of these companies actually shutting up shop and losing people's money has already come to pass in some cases. Dunne & Maxwell disappeared overnight, leaving hundreds of customers not knowing how much they owed to debtors. The Central Bank and the National Consumer Agency have been proactive in seeking to assist these people by asking their creditors to deal with them sympathetically, but that is not enough. Prevention is better than cure.

The people who were victims of Dunne & Maxwell should have been aware the director of the company previously had his credit licence revoked in Britain because he had undisclosed convictions. The customers with the company were not aware anything was wrong until the Central Bank wrote to them and warned them about lodging their money with the company. It emerged afterwards that the director of Dunne & Maxwell had his licence for a previous debt management company investigated and revoked by the British Office of Fair Trading as far back as 2005. Having had his licence revoked in Britain, this man could move his business interests legitimately to Ireland and suck people into trusting his company, and there was no one from the State to protect the ordinary people. The Home Payments collapse left 2,300 customers owed more than €6 million. I know of one constituency case where a woman lost €2,000 to the company. This woman was doing her best to manage her debts in straitened times and this was a heavy blow. The company collapsed last year, but the woman only received a letter last week from the liquidators asking her to account for how much she had with the company. In the interim, she has had to deal with a range of outstanding bills she thought were being taken care of, but from an even worse financial position this time.

These human stories make the headlines when the event happens, but afterwards, the people involved are left to their own devices. They are left with the aftermath and very little is done to help them. It must have particularly stung the customers with Dunne & Maxwell that such a thing could also happen to them after the experience of Home Payments. There is nothing to say it cannot happen again. A customer of Dunne & Maxwell told the newspapers she had paid in excess of €1,000 to the company a few years ago to pay a loan on her behalf, but was contacted four months later by debt collectors for the lender to say no money had been received, meaning she was even deeper in arrears.

Many customers of these two companies not only lost money on deposit but also found out the agencies had not been paying their bills for months. The experience in Britain has been these companies offer poor advice, do not offer solutions in the best interests of the consumer, and instead offer advice which is the most profitable to the agency. The fees are consistently high, with the agencies' fees front-loaded and the customers' creditors not receiving any bill repayments until at least after the first two months, while the agencies are engaged in cross-selling both debt management and loans. It should not have been rocket science for us in this State to look at what was happening across the water and to legislate to protect our own citizens from these agencies. The Law Reform Commission has all the work done on legislation, a fact acknowledged even by the Central Bank. There is, therefore, no need for the Government to stall on the issue. Sinn Féin will engage constructively on any Bill that will put it on the agenda. We support the Bill before the House.

Furthermore, we want the Government to start taking the issue of personal debt as seriously as it is taking the issue of bank debt. Since it took office, it has put €24 billion of the people's money into the banks. Meanwhile, there are over 100,000 households in mortgage distress. We have people struggling with credit card bills and turning to moneylenders to make ends meet. These moneylenders can legally charge interest rates of up to 188% per annum. I questioned the Minister for Finance time and again on this issue, but he is doing nothing about it. The biggest initiative taken in the last year was to ask moneylenders to tell customers the loan to which they were signing up, at 188%, was a high interest loan. This is wrong. The system has to change.

The reason people are accessing moneylenders and debt management agencies cannot be ignored. Over the course of four years we have had five austerity budgets which have severely impacted on the living standards of ordinary people and a large section of society. I cannot say every section of society because not everyone has been impacted on. We know certain people at the upper echelons have been protected. We have seen social welfare cuts, increased taxes lessening take home pay and growing bills. The Government plans more of the same type of austerity measures for the next three years and, let us be honest, if the treaty is passed on 31 May, for a number of following years.

Sinn Féin agrees there is a need for deficit reduction, but there is a way of doing this. One can, as the Government and its predecessor believe, cut and tax the lowest paid, or one can, alternatively, introduce a fair tax system, eliminate spending waste and, more important, invest in job creation to get people off the dole and back paying into the Exchequer.

For years we have been warning that the Government's approach is not only harming the economy but also forcing people into debt. The social consequences are something we do not talk about enough. We talk about figures and how the State's books will look at the end of the day, but the social consequences of this policy are atrocious. Earlier this morning my party leader spoke about the number of people who were emigrating every day. Yesterday I asked the lady who works in my office about her weekend. She said she had been to a going-away party. Three people from her parish left yesterday to go to Australia. I spoke to someone else in the neighbouring parish who told me six people had left yesterday. I spoke to a young lad in my office to gain work experience. He plays in a band and says he is flat out as a result of playing at going-away parties. Everyone is going to Australia. These are the social consequences of what is happening.

We have heard about the austerity treaty and why we should support it. The parties which are now cheerleaders for it are the same one which ensured the debt was placed on the people. Fianna Fáil, Fine Gael and the Labour Party have all supported austerity policies, and the debt management agencies about which we are talking are the outplaying of their political choices.

The strain people are under is evident in every county in the State and it is essential that the Government does what it can to reduce it and assist people to get help. As a first step, we must ensure the Money Advice and Budgeting Service has sufficient resources to be the first point of call for people struggling to meet debts in order that they do not fall victim to moneylenders or fraudulent debt management agencies. I support the contents of the Bill and appeal to the Government to deal with this problem now. Let us not have more headlines in the newspapers about people who were caught out and lost their savings. This measure is long overdue. I commend the Bill to the House.

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