Michael McGrath (Cork South Central, Fianna Fail)

At the outset I thank every Member who made a contribution to the debate either last night or tonight. I was not in the House last night. The Minister of State will note that I was at a public meeting on the referendum in Dunleer, County Louth, organised by Fianna Fáil. The meeting went well. The majority of Fianna Fáil supporters will be voting "Yes" on polling day.

I have read the transcripts of contributions from Deputies on all sides of the House. All the contributions have been constructive and positive and this is to be warmly welcomed. This is the template we should follow wherever possible when dealing with issues in the public interest.

I thank Deputy Sean Fleming for moving the Bill and for setting out a comprehensive Second Stage speech. I wish to put on record that the Bill was drafted by Senator Thomas Byrne. He has done an outstanding job in preparing the Bill. We first published the Bill in June of last year but we did not get it formally moved in the House until last September. It has been around for some time but we are pleased to have the opportunity to debate it on Second Stage in the House.

I welcome the fact the Government is embracing the principles of this Bill and I realise people are working on the Government side on amendments to the Central Bank (Supervision and Enforcement) Bill. I also realise the Government is keen to enact that legislation as quickly as possible to ensure this sector will be regulated. I urge the Government and the supporting officials to read the Bill carefully and closely. I further urge them not to be afraid to take as much from it as possible. A considerable amount of work went in to the drafting. The definitions are carefully thought through and they may be of benefit to the Government when it drafts the necessary amendments to the Central Bank (Supervision and Enforcement) Bill. The Government should feel free to take from this Bill what it wishes in order to enact the provisions as quickly as possible.

One theme running through all the contributions in recent evenings has been the human experience and the fact that this is all about people. There are people in every constituency in the country who are in awful financial situations. Last week a couple came to me with personal unsecured debts of more than €80,000. They have a mortgage of more than €300,000, their debts total approximately €400,000 and the household income is approximately €30,000. There are so many relevant issues that must be dealt with. MABS is involved and is trying to help them. Even after teasing out and working through all the issues, there will be legacy problems for these people and they fully accept this.

The issue we have highlighted through this Bill is only one part of a multifaceted approach that will be necessary to solve the overall problem of personal indebtedness to the greatest possible extent. The personal insolvency Bill that the Government is due to publish next month is of critical importance in this regard. I welcome the comments of the Taoiseach on the Order of Business today. He said he hoped that legislation could be enacted in the early autumn. That may be ambitious but it is what we should aim for. Thousands of people will need to avail of a non-judicial debt settlement system. It is needed urgently and I hope the Government prioritises it and brings it forward as quickly as possible.

As several speakers pointed out last night, there are legitimate providers in the industry we have highlighted and there is a role for debt advice in Ireland. While MABS provides an excellent service and it is appropriate that clients of debt advisory firms should be aware of the service it offers, other service providers can play a role in meeting the needs of distressed borrowers. Some customers may consider they need the ongoing hands-on support a debt adviser can offer and, in some cases, by keeping a client out of court the debt adviser may offer a cheaper overall solution for the consumer. However, the debt advisory firms which are playing by the rules and following best practice - it should be acknowledged that there are some such firms - are being put at a disadvantage by rogue operators within the industry which has mushroomed, as Deputy Michael Healy-Rae stated, following the economic collapse. This created an opportunity for the sector to develop and it has done so, creating major problems and issues for the consumers of its services in the process.

A number of United Kingdom companies are offering services in Ireland, despite not having a presence in the country, and have little understanding of the market here and the needs of Irish customers. This highlights how vulnerable and exposed consumers are when they avail of the services provided by firms in this industry.

In preparing the Bill and for the debate we spoke to the more reputable providers in the debt advice and debt management sector and they wanted regulation. They support the need for regulation and set up the Debt Management Association of Ireland, the establishment of which was welcomed by the Irish Banking Federation. The association has highlighted some of the key areas and has its own code of practice dealing with matters such as training; marketing; advertising; the information to be provided for customers; contract terms; customer accounts and so forth. However, in general, self-regulation is not sufficient and the entire sector must be brought under the supervision of the Central Bank.

I acknowledge the point made by the Minister that some firms which are administering payments are governed by existing legislation, but many others are not. It was only following the collapse of Home Payments Limited in August last year that the Central Bank conducted a study of the area and found many firms which should have been regulated and subject to authorisation by it were operating without such authorisation. They will now be brought under its umbrella.

The case of Home Payments Limited has been well documented in this debate, but there are others. Dunne & Maxwell, trading as yourmoney.ie., had been operating for seven years, promising on its website that it could reduce people's debt by 50%. In January, in an unprecedented initiative, the Central Bank wrote to hundreds of customers of Dunne & Maxwell to strongly recommend that they suspend all payments to it immediately. The letter was unusual in its directness. It informed people that they should consider contacting the Garda if bill payments to be made on their behalf by the company were not up to date. The company disappeared overnight. This proves that when the shadow of regulation falls on many of these firms, they do not stand up to scrutiny and fold up their tent. For the customers concerned, it may have been the best outcome and may well have prevented some of them being burned in the way the customers of Home Payments Limited had been burned.

Deputy Eamon Ó Cuív has rightly raised the issue of the qualifications of those who can legitimately provide this service in the new regulatory environment which will be created as a result of the Central Bank Bill. We support the need for those involved to have proper professional financial qualifications because they are being entrusted with people's money and giving advice to individuals who may not have the wherewithal or skills to deal with their financial problems. The least these customers deserve to know is that such advisers are appropriately qualified and competent to do the job they are being taken on to do.

The issue of fees was well vented in the debate on both evenings and a number of examples were given. I learned about a case today in which a customer had paid €1,800 in fees alone in the first three months of engagement with a debt management firm. That is an example of the abuse taking place in the absence of regulation. Therefore, we need to see such regulation as quickly as possible. In the Bill we are calling for a code of practice to be published by the Central Bank within a defined period after the Bill is enacted.

The Minister of State, Deputy John Perry, set out last night a comprehensive response on behalf of the Government and rightly divided the sector into three broad areas. The first encompasses firms which are not administering payments but providing debt management advice. The Central Bank estimates that there are 30 to 40 such firms. The second category includes budgeting firms which administer payments on clients' behalf. Apparently, there are only two or three such firms remaining. The third category includes debt management firms which offer to negotiate with a client's creditors to secure a write-down or a better deal. They, too, can administer payments. It is estimated that there are about 20 such firms. Approximately 60 firms have been identified as being in the marketplace providing services.

In the context of the Personal Insolvency Bill due before us shortly, it is all the more important that regulation is introduced in this sector because far from that Bill sounding the death knell for the industry, it will give it an enormous fillip because it will present an opportunity to guide vulnerable consumers through the new insolvency regime and advertise the potential outcomes in an effort to attract new customers. The Government should ensure, therefore, that the sector is strictly regulated in advance of the Personal Insolvency Bill being enacted in the coming months.

I welcome the positive approach adopted by the Government to this legislation. From the perspective of Fianna Fáil, it does not matter which Bill leads to the outcome we all want to secure - the regulation of those providing services for consumers in this industry. It is all about protecting consumers. What we have done in this debate is use the opportunity afforded by Private Members' time to put the spotlight on an issue that is unquestionably and indisputably of concern to a growing number of people. If the problem is not addressed, it will affect many thousands more in the years ahead. That is the reason we have used Private Members' time to put the spotlight on this issue and pressure on the Government to complete the process it has started. It is welcome that it has been started. I will bring the expertise we have gained in conducting research and our preparation of the Bill to bear when it comes to discussing Committee Stage amendments to the Central Bank Bill.

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