Verona Murphy (Wexford, Independent) | Oireachtas source

Where would we be without the Rural Independent Group and the Regional Group?

The Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Bill 2021 brings in a number of different consumer protections which we broadly welcome. The first protection I will highlight is the setting of the maximum annual percentage rate for credit agreements and hire purchase agreements at 23%. Crucially, the Bill states that it is the responsibility of the lender to ensure compliance with this provision. Not all consumers or borrowers have the same understanding of how interest rates work. Some may have poorer numeracy skills than others and it is for reasons such as this that built-in protections, such as limits on interest rates, are necessary. I imagine most of us are familiar with being in a shop and looking at buying something reasonably expensive when the salesman says something along the lines of "This can be yours for a €300 deposit and €50 a week for the next two years." That type of agreement may appeal to many people but how many are able to sit down and work out the annual percentage rate on the agreement or know whether the deal being offered is a rip-off? This is just one simple example of why the 23% limit is welcome.

The Bill says that this maximum rate of 23% will apply to credit agreements other than moneylending agreements. Moneylenders are licensed by the Central Bank and have to comply with certain conditions, including providing warnings and full information on costs to consumers before entering into any agreements. I fail to understand why this Bill does not, in the interests of consumer protection, include some type of cap on the annual percentage interest rate moneylenders may charge. It is often when in real financial difficulty that people turn to moneylenders. I refer to those struggling in low-paid jobs, those trying to support families on their own, those who have issues with substance abuse or those who are just poor at managing money, who do not have money management skills and who unnecessarily spend beyond their means. Surely those consumers who turn to the services of moneylenders, for whatever reason, also need protection from massive interest rates.

The Bill also requires the Minister to request the banks to collect and publish information on credit agreements, hire purchase agreements and consumer hire agreements. The Bill also says that this information may be required on a one-off basis or on an ongoing basis. It is worth noting that none of the regulations in the Bill is without consequence. While the regulations might be necessary, we must also recognise that every new regulation places an additional burden of work on financial institutions, meaning that their costs are likely to rise. We have seen banks leave the Irish market in recent times and we have seen how increased regulation has helped cause problems in our housing market. We need to consider the impact new regulations have on the organisations that must comply with them.

I would like to highlight the contents of an eye-opening press release I received earlier this week relating directly to consumer protection. It is from the Alliance for Insurance Reform and its headline is "Central Bank analysis shows society being held to ransom by lawyers and insurers". It makes the following four claims, each of which is concerning from a consumer protection point of view:

- Lawyers gouge clients as litigated claims for minor injuries cost up to 25 times ... in legal fees, [and they take] 2.7 years longer to settle and yield less for claimants than any PIAB award.

- Lawyers make an average of €22,792 in fees on employer liability claims for minor injuries.

- Insurers losses due to poor investment performance, increased broker commissions, increased reinsurance costs and reserves - not claim costs.

- Claims costs have been dropping since 2015, at [a] record low in 2019.

If a lawyer makes an average of €23,000 on employer liability claims for minor injuries and the average fees via PIAB for the same type of case are less than €1,000, we have a serious consumer protection issue which needs to be addressed. Issues like this should concern us more than a furniture shop selling a sofa on a credit basis of 24% interest. Overall, these consumer protections are welcome and I hope the Minister is listening to my last point on legal and insurance costs.

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