Charlie McConalogue (Donegal North East, Fianna Fail)

I commend my colleague Deputy Michael McGrath for introducing the Regulation of Debt Management Advisors Bill in Private Members' time. The importance of the issue being addressed in the Bill is reflected in the fact that the Government is willing to incorporate the legislation in a forthcoming Central Bank Bill, which is a worthy approach. It is entirely appropriate when the Opposition comes up with constructive proposals that the Government is willing to take them on board. This could have happened more before now, but it is welcome that in this instance the Government has decided to take this approach.

The Bill addresses an industry that requires regulation and which the Government has not addressed since it took office. Debt management advisers and companies have been operating unregulated and, in some cases, preying on people already in desperate straits. There have been many instances of companies drawing on people's worries and, as a result, making a profit from them. One company, advertising on the Internet, stated it could reduce clients' debts by thousands of euro, even by up to 50%. It was taking money in from people to do this and then simply vanished. The Central Bank advised all of the company's clients to cease all payments but for many, the damage had already been done.

The Bill will ensure those who find themselves in an already difficult position with their debts will not be subject to an unregulated part of the financial sector. Now more than ever, people are desperately seeking advice on how they can turn things around. This is from where the growth of the debt management industry and debt advisers stems. The Debt Management Association of Ireland states all clients in debt must be dealt with in a professional, compassionate and effective manner and helped to become debt free as quickly as possible. Unfortunately, as in many unregulated areas, one sees some good and bad practices. The people, unfortunately, have experienced the bad again with some debt management advisers.

No one can blame the public for being naturally drawn to these offers of financial stability and sound advice. People will not visit the Central Bank's website to check if their adviser has been approved, presuming these companies are already being monitored and regulated, which is not an outlandish presumption. Instead, they are drawn in with false promises and left with more debt, stress and worry. This could have been avoided had more emphasis been placed on the Money Advice and Budgeting Service by the Government while ensuring the excellent service it provided was properly resourced. However, the service has been put under strain. By virtue of the fact that the private debt management advisory sector is unregulated, people have been lured by much more glamorous promises made by private debt management advisers. The reality is that many are suffering in a way they never did in the past. We should ensure there is a well resourced State debt management service available as the first point of contact. Over 1 million people owe money, a figure which, unfortunately, is growing, yet the Minister stated only 30,000 had availed of the services of MABS last year. That is why the Bill states that debt management companies must make the people seeking their advice aware of the services offered by the Money Advice and Budgeting Service.

This Bill ensures debt management advisers will be regulated financially and client funds will no longer be controlled by such companies. Similarly, a client will no longer have to pay up-front a fee for advice or end up further in debt as a result of seeking advice from these companies. The industry has proved it cannot regulate itself, which is unfortunate for those who operate in an ethical manner. Experience tells us that when one is in a sector that handles money, there must be regulation by the State. The need for training within the industry is also vital for its future, and this Bill suggests that a financial adviser qualification be a necessity for those who want to work in the field. Currently, there are few or no entry requirements in becoming a financial adviser, and our measure will ensure that people serving the public offer a service that might, in some way, improve their position. That is why it is so important that the Bill is in front of us.

I mentioned before that a survey in 2011 indicated that over 1.5 million Irish people owe money on an unsecured credit product, such as a credit card or personal loan, with approximately 250,000 in arrears now. Worryingly, approximately 93,000 people were three months or more behind on payments in that survey, which also highlighted the growing debt problem among those who are unemployed, with 40% of unemployed people behind in debt repayments. This is the current scenario facing the country, and it is a poor reflection on us in many ways that it is only now that we are coming to deal with regulating the sector. With a little bit more prior planning and forward thinking, we should have been aware that such regulation was required.

In towns and villages around the country estate agent offices are in many cases being replaced by people offering financial management advice, and that reality will not change in the very near future. Part of the problem stems from the urgent need for the Government to get its head around how it will assist those people with personal debt, credit or mortgage arrears problems. The banking debt has had to be addressed, partly because of pressure from Europe that left us no option, but we have kicked the can of mortgage debt down the road for a period. There are people out there in serious positions, as many cannot pay down debt and others can afford to pay it but are facing a lifetime in a job with the majority of disposable income going to feed a mortgage debt. Poor timing and bad luck would have led to such people taking on that debt.

I commend the Minister of State for accepting this Bill and I urge him to ensure it is progressed quickly within the Government's legislation. It is the least we can do for the people in debt who may require debt advisers in the coming time.

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