Dáil debates

Thursday, 15 July 2021

Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Bill 2021: Second Stage (Resumed)

 

Question again proposed: "That the Bill be now read a Second Time."

1:10 pm

Photo of Mattie McGrathMattie McGrath (Tipperary, Independent)
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We will hear first from Deputy Devlin.

Photo of Cormac DevlinCormac Devlin (Dún Laoghaire, Fianna Fail)
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Could we have Deputy Murnane O'Connor first, please?

Photo of Mattie McGrathMattie McGrath (Tipperary, Independent)
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Ladies first.

Photo of Jennifer Murnane O'ConnorJennifer Murnane O'Connor (Carlow-Kilkenny, Fianna Fail)
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This Bill is crucial. It is protection for consumers and it cannot come quickly enough. Bringing in additional regulation and consumer protections across newer and emerging credit products and companies is now more important than ever. We have seen an explosion in non-cash loans and credit being provided indirectly to the consumer, for example, in buy now, pay later agreements. In particular we have seen it with the surge in online activity during the pandemic.

I welcome the further consumer protections when it comes to personal contract plans, PCPs. I am not an expert but experts have expressed the opinion that many motorists really do not understand their liability. We must do all we can to ensure there is protection for them. We have to look at communication as well. We need to ensure there is good communication and I appeal to the Minister of State to look at this as well.

The Tutty report recommended that further consumer protections in respect of PCP agreements be introduced. We can see why. The Central Bank indicated in October 2020 that data for the total car finance market in Ireland, which includes Irish resident banks and non-banks, showed that as of September 2019 there were 76,153 PCP loans outstanding, representing a total outstanding stock of nearly €1.5 billion. At the end of February 2020, the data showed that the outstanding amount of car finance consumer credit advanced to households by Irish resident banks by way of PCP was over €1.5 billion in respect of 62,078 contracts. One quarter of all car financing is done through PCP agreements. Consequently, this legislation is important.

Spreading the cost of buying a car holds great appeal for most motorists. While conventional hire purchase divides the total amount into equal monthly payments over a period of years, the PCP involves a series of smaller monthly payments with a larger payment at the end of the agreement. That is important and we need to highlight it. Although some PCP products are underwritten by regulated companies, PCP products are not specifically regulated by the Central Bank. These loan agreements are often sold by companies that are not obliged to carry out suitability or affordability checks on consumers. This can mean uncertainty for anyone who encounters a loss in income or change in circumstances.

The Bill would bring these companies within the scope of the consumer protection code and ensure consumers have the same protections as consumers who purchase traditional types of financial products, such as car loans and personal loans. This type of protection benefits the customer as he or she can make better informed decisions about financial products and avoid the unsustainable debt situations that lead to serious arrears and financial difficulty.

The Bill is welcome. I am delighted to be speaking about this today because I believe it has not been addressed for years. I welcome the legislation and I give it my full support.

Photo of Cormac DevlinCormac Devlin (Dún Laoghaire, Fianna Fail)
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I thank the Minister of State, Deputy Fleming, for bringing the Bill forward and for listening to the observations of colleagues. My thanks to the Acting Chairman as well.

This is a great opportunity for me to speak about the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Bill 2021. As my colleague, Deputy Murnane O'Connor, stated, the Bill is long overdue. Certain changes in the regulations were required. The Bill is timely and necessary.

The primary purpose of this legislation is to protect the consumer by ensuring that any person or firm carrying on a business of providing credit, hire purchase, personal contract plan, PCP, or consumer hire agreements to consumers or other relevant persons will fall within the regulatory remit of the Central Bank of Ireland. It will give the Central Bank the necessary legislative powers to apply its consumer protection code, or any other relevant code, to such firms.

The Bill facilitates the implementation of a key recommendation of the Tutty report, about which I will speak in a moment, on the operation of the personal contract plan, PCP, market. The report recommended that the Central Bank apply relevant provisions of the consumer protection code to all providers of hire purchase and PCP agreements where such financial products are being sold to consumers. It referred in particular to the code’s obligations on financial service providers to assess, prior to entering into a credit agreement, the financial capacity of the consumer and the suitability of the product for the consumer. As all providers of PCP and other similar agreements to consumers will now have to be authorised by the Central Bank, the bank will then be able to apply its consumer protection code and other consumer protection powers to such firms. This will improve the level of protection available to the consumers of such agreements.

As has been widely reported, PCPs have become increasingly popular in recent years and now account for about 40% of car-related bank debt, having increased from about 15% in the middle of the last decade. PCPs generally offer lower monthly repayments to the buyer. They are particularly popular with car dealers as they increase the potential for repeat business. However, they are complex financial products involving a degree of risk. It is important people entering into such contracts are aware of what they may entail and the risks involved, particularly the significant balloon payments that can come as a nasty surprise at the end of some financing arrangements. The Competition and Consumer Protection Commission carried out a study of the PCP market in 2018 and determined that the complexity of the product, combined with the potential for softening car prices on the second-hand market, risked causing "significant consumer detriment", a point that was emphasised by Frank Conway of the Irish Financial Review and Moneywhizz. While there has been a significant hardening in used car prices post-Brexit and during the Covid pandemic, this is still a medium to long-term concern.

As I referred to earlier, a review of these financial products was carried out by Michael Tutty in 2018. The review stated that further consumer protections were necessary, hence this Bill. This legislation will ensure that all providers of hire purchase and PCP agreements will come under the regulation of the Central Bank.

1:15 pm

Photo of Mattie McGrathMattie McGrath (Tipperary, Independent)
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Cé atá ag caint ar son Sinn Féin? Who is speaking for Sinn Féin? Nobody is indicating. We will move on to the Labour Party slot. Cé atá ag caint ar son Pháirtí an Lucht Oibre? Níl éinne ann. We will move on to the seven-minute Government slot.

Photo of Cormac DevlinCormac Devlin (Dún Laoghaire, Fianna Fail)
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May I resume?

Photo of Mattie McGrathMattie McGrath (Tipperary, Independent)
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Yes.

Photo of Cormac DevlinCormac Devlin (Dún Laoghaire, Fianna Fail)
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I have a few more remarks to make on the Bill. I thank the Acting Chairman. Section 2 is the key section. It amends section 28 of the Central Bank Act 1997. Section 28 sets out the various definitions for the purposes of Part V of the 1997 Act and defines the scope of the Central Bank authorisation responsibilities in respect of "regulated businesses" that are involved in the provision of certain types of financial services. The Bill provides for widening the regulatory scope of "retail credit firms" and "credit servicing firms" so as to include also the direct and indirect provision and servicing of credit, hire purchase, PCP and consumer hire agreements as those agreements are currently defined in the Consumer Credit Act 1995. Accordingly, any entity which provides these types of agreements to relevant persons will now come within the authorisation and regulatory scope of the Central Bank. This will then allow the Central Bank to apply its consumer protection code and other consumer protection and relevant regulatory measures to such firms and therefore facilitate the implementation of the key Tutty report recommendation on PCPs, about which I spoke earlier. I welcome this pro-consumer legislation and am happy to support it. I thank the Minister of State, Deputy Fleming, and his officials for bringing it forward.

I am not sure whether I will be able to get speaking time later on this afternoon but, as we conclude the term, a year into this Dáil, it is appropriate to thank the Cathaoirleach Gníomhach, the Ceann Comhairle, the Leas-Cheann Comhairle and all the staff as this may be the last time we sit here in the convention centre. I hear many people who are happy with that but it is thanks to the convention centre and to the facilities that have been offered to the House over recent months and during the pandemic that we have been able to conduct our business safely. I thank the staff of the Oireachtas for the assistance and support they have provided to all Members of the House over recent months and for facilitating us. I also thank the gardaí, the ushers and everybody else involved. I thank the Cathaoirleach Gníomhach for allowing me back in. I may touch on some other points if I have an opportunity to speak again later.

Photo of Mattie McGrathMattie McGrath (Tipperary, Independent)
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And so say all of us. We thank each and every person involved in keeping us in order and facilitating us here. We all associate ourselves with the Deputy's remarks.

Níl éinne anseo ó Shinn Féin. An bhfuil aon Teachta de chuid the Social Democrats ann? Níl. There is then another Government slot. An bhfuil éinne eile ón Rialtas ag iarraidh labhairt? No. Táimid ar ais ag Sinn Féin arís agus, ina dhiaidh sin, Solidarity-People Before Profit. Níl éinne ón bpáirtí sin anseo. There is then another Government slot but níl éinne anseo. It is then Sinn Féin arís so we will move on to the Regional Group. I am delighted that rural Ireland is keeping the show on the road. Tá beirt Teachta ann, an Teachta Verona Murphy agus an Teachta Shanahan.

Photo of Verona MurphyVerona Murphy (Wexford, Independent)
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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.

1:25 pm

Photo of Matt ShanahanMatt Shanahan (Waterford, Independent)
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I welcome the Bill, as I am sure most Deputies will. It is about giving full transparency to costs in terms of credit agreements and licensed credit intermediaries. We have heard a lot in the last year and more about economic challenges and the level of indebtedness. Credit agreements and different ways of buying goods and products, including hire purchase agreements and private contract agreements, are ubiquitous now. People do not always understand the terms of contracts they enter into. There has been, for many years, an issue about the annual percentage rate, APR, on credit agreements and how it is calculated. I am happy to see in the Bill a facility for the Central Bank to look at various credit arrangements companies have in place and to amend the APR calculation in contract agreements.

It is important that this legislation will ensure credit agreements cannot have an APR of more than 23%. To put that in context, the rate of international borrowing for EU countries is now between 0% and 0.5%. Credit intermediaries can get access to funds at 1.5% or 2%. Whatever they put into the marketplace after that gives them their gross margin. I worked in an area that used financial services and a figure of 3% was often given as a cost base in terms of credit supply. The cost of funds plus that 3% amounted to the operating costs and whatever was charged after that was the margin. That means we could and do have financial companies operating in this State which have a net margin rate of about 4%. Whatever they charge in APR after that is their gross margin, and nearly their net margin. This measure is timely.

This provision will apply to hire purchase agreements. Such agreements are treated differently from other types of credit agreement. It is about a legal definition of when the title of goods passes or does not pass. The Bill will hopefully also clear the large amount of small print from financial contracts. A large number of people in this country have found out about this to their cost, either because they did not read the contract fully or did not take advice or have the small print fully explained to them regarding add-on terms such as final payments and the calculation of final balloon payments.

In general, the Bill is to be welcomed. The car and retail industries have also been mentioned. Everybody wants transparency. This will facilitate more trade and business and ensure consumers have higher levels of protection in terms of these agreements.

I will mention moneylending. Deputy Verona Murphy highlighted some issues related to licensed moneylending, which appears to be outside the scope of this legislation. There is a lot of informal moneylending going on, much of it based in criminality. Anybody who has done work in the community has come across this and the exorbitant rates of interest charged, which can run to 100% or 200% in a short period for those who do not manage to make payments. It is important that people have an avenue.

I compliment the credit union service, which does a fantastic job in making credit available on generous and accommodating terms for those who are challenged in trying to access credit. Children will shortly return to school. This is one of the most expensive times of the year for families who face having to pay for books, school uniforms, shoes, travel and so on. Many of them try to access money and anybody with a poor credit rating will get very little hearing from the banks. The State needs to address this issue and find a way to filter people who have a poor credit rating to allow them to access reasonable finance and give them community support for longer terms of repayment. These are hard-pressed families and there is no spare money knocking around. Many of them are repaying debts at €5 and €10 per week and it is hard to clear any significant amounts of debt on those terms. We will have to look at that and, hopefully, legislate for it.

Overall, my colleagues and I welcome the Bill and the additional securities it will offer consumers. It is timely, particularly coming into the summer months with the economy opening up. We hope it will be enacted as soon as possible.

Photo of Mattie McGrathMattie McGrath (Tipperary, Independent)
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An bhfuil aon duine ann ón Rialtas? As no speaker from the Government side is here, we will move on to the Rural Independent Group. Deputy Michael Collins is sharing with Deputy Richard O'Donoghue.

Photo of Michael CollinsMichael Collins (Cork South West, Independent)
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Deputy O'Donoghue is on the way. I hope he will arrive on time as the debate is running slightly ahead of time.

The Rural Independent Group welcomes the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Bill. The purpose of the Bill is to extend the Central Bank's "authorisation requirements to persons carrying on hire-purchase or consumer-hire business or providing credit indirectly and persons carrying on business relating to hire-purchase or consumer-hire agreements or the indirect provision of credit; to provide for the collection and publication of information on credit agreements, hire-purchase agreements and consumer-hire agreements; for those and other purposes to amend the Central Bank Act 1997; to provide for a limit on the interest rate that consumers may be charged under credit agreements and hire-purchase agreements; to provide for a requirement to include the annual percentage rate in a hire-purchase agreement; for those and other purposes to amend the Consumer Credit Act 1995 and to provide for related matters."

All this sounds good and we are supportive of it. However, we have banking institutions with meticulous procedures in place, including credit unions, which are stifled from doing serious business in the market. I know the Minister of State is looking into the area and a report is being drawn up but successive Governments have squeezed the credit unions out from competing with banks. This is an area in which we need the credit unions to compete and in which they want to compete but, because of dubious decisions made by successive Governments, it has not happened. This must end immediately.

Anyone who knows anything about the credit unions knows they have great relationships with the people who do business with them. It is one to one. You are not just a number; you are a highly respected customer. The managers of credit unions have meticulous and often incredible relationships with the people they know.

I met recently with representatives of credit unions in west Cork. Those businesses are in a healthy state. I met with management and board members from Skibereen, Clonakilty, Bandon, Dunmanway and Bantry. All of them, however, are facing a doomsday scenario if the Government does not allow them to do business. Why has the Minister of State, Deputy Fleming, like his predecessors, not allowed credit unions to provide proper mortgage facilities for people who want to get started in life? Why has this Government, like previous Governments, continuously stifled credit unions to the point where they are on the verge of going out of business? Are the larger banks wagging the tail in all of this? KBC Bank and Ulster Bank have waved goodbye to the Irish market and Bank of Ireland is closing branches throughout the country, including in Bantry and Dunmanway in west Cork. It is time for the Minister of State to wake up and smell the grass growing. The buddies the Government backed have let it down. If it does not look outside the box and encourage credit unions, as well as post offices, to compete in the banking sector, businesses will be in dire trouble in this country.

In fairness to the credit unions, they have been meticulous in the way they have looked after people down through the years, giving car loans, providing finance for people to do up their home and helping students to go to college. They build a relationship with people, often from the cradle to the grave. That type of relationship is not happening in the banking sector. When I go into a local bank, no matter where it is - sometimes I go into a branch in Dublin - I am pushed towards a machine. Customers are only a number and it is all about pressing buttons instead of the one-to-one relationship where you look the manager in the eye and do business with him or her. The men and women working in credit unions know their customers, their history and their family's history, and they know the customer will repay the loan.

There are great people in this country who are going through a difficult time at the moment. Great business people are going through incredible difficulties. A large number of publicans and restaurant owners, whose businesses have been closed now for 400 days, have told me they are in dire straits and finding it very difficult to get agreement from the banks that remain in the market. Those people are facing massive difficulties. My worry is that, in the coming years, their mortgages could be sold on to vulture funds because a word or two was changed in their agreement during this pandemic and they will not be covered. That will be brought to bear on them later on. The vulture funds in this country are well supported by the Government. We need to look seriously at this issue. Businesses that are in trouble through no fault of their own need a way to keep an honest cash flow going. I will be pushing very hard on this issue.

I do not want to take away from this Bill, because it is important and the Rural Independent Group is supporting it. The reality, however, is that I come from a community in west Cork, Schull, where we lost our bank and then, a year or so later, the local shop closed. Up to 30 jobs are gone. This shows what can happen in a community and the impact of it. It is the worry I have now for the people of Bantry and Dunmanway, who are losing their banks. What will be the outcome for those towns and their surrounds? People in rural areas always go to the town when they want to do a bit of banking and other business. It is hugely important that those businesses are supported.

It saddens me that the Government is standing idly by and washing its hands of any of the decisions that are being made by banks. When the banks got into trouble, the Government had to come to their aid and prop them up. Surely be to God, as a shareholder in those banks, with the status or whatever that confers, the State can give some support to the towns and villages of rural Ireland to ensure the banks located there will survive. We need to build up the credit unions and look at the post offices and what they can do in terms of rolling out finances and financial aid. Postmasters and postmistresses are desperate to get business flowing into their post offices. It is vital for their survival in rural towns and villages. The Government, however, has sat idly by and failed to support them or facilitate new business for them.

A system whereby post offices could provide a range of banking services needs to be considered. In the previous Dáil, the Rural Independent Group looked at how this business is done in other countries. There are models operating elsewhere that could be adopted very simply for post offices. I could see them working in places like Drimoleague, Kilbrittain, Kinsale, Bantry, Skibereen, Castletownbere, Schull and Goleen. All of these places need investment and a better banking structure. Some are very lucky to have credit unions, most of them have post offices but, unfortunately, they do not have the banks that are needed. Those banks have walked away and moved to a computerised system where you have to press a button on your telephone to get service. Nobody in the banks knows any of the customers or their history. For business owners, it is all down to an engagement between their accountant and the bank. The personalities are gone out of it because the bank manager located closest to you is probably 50 or 60 miles away and does not know the person he or she is dealing with.

In fairness to the Minister of State, he has been trying to engage with the post offices. Please God that will yield some success. The Rural Independent Group supports the Bill and I thank the Minister of State for bringing these proposals to where they are. People have issues and concerns in regard to loans. They want to feel comfortable about the loan they have. They need to know there are rules and regulations around it and that they are not dealing with unscrupulous individuals. If there are no rules and regulation, people are in danger of having their lives destroyed.

Unfortunately, we are coming into a very dangerous time for our economy. While there is a bit of cash flowing around, mainly due to the pandemic unemployment payment, that is going to dry up. I have been contacted by a large number of business owners who are incensed by the increase in various costs, particularly of fuel. As I said in the House last night, in some parts of west Cork, fuel prices have gone from €1.17 a litre 12 months ago to between €1.42 and €1.50 now. That is insane. Fianna Fáil and Fine Gael are going to drive those costs up further because it is the Minister, Deputy Eamon Ryan, who is wagging the tail. He is running the show and the other members of the Government are just saying, "Shove it on". They are shoving the costs onto the people of rural Ireland. People in rural Ireland are being attacked and they are feeling it. I spoke to a man last week who has 13 vans running as part of his business. He said he has plenty of business but he has to take some of the vans off the road because he cannot afford to keep them going. He has to fill them with fuel every week, even before he pays someone to drive them, and the price is getting higher all the time.

The Minister of State needs to wake up and smell the grass growing. He needs to go back out and engage with people in rural Ireland. He must invest in credit unions because they have the right people and the procedures and everything meticulously in place. I would appreciate if the Minister of State would concentrate on that. I have said it to him before and I will continue to say it. I am fighting for the ordinary people living in the communities in my constituency of Cork South-West.

1:35 pm

Photo of Richard O'DonoghueRichard O'Donoghue (Limerick County, Independent)
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I welcome improved regulation of finance services, especially when it comes to helping young people to get finance for cars and other vehicles. The Consumer Credit Act needs to be amended to ensure transparency and facilitate the Central Bank to publish information around credit agreements. Until now, there was not proper regulation of the terms given to people who bought cars on credit. This Bill will ensure that the interest customers are charged is transparent and the APR is included in the paperwork. In addition, personal contract plans will have to be agreed by the Central Bank before each agreement is sanctioned. I am surprised, however, that it has taken so long for these changes to be implemented. As of February 2020, there were 62,078 PCPs in operation in Ireland, which was an increase of 527% since 2014. That is a shocking statistic in an unregulated market.

When Covid-19 hit, we saw clearly which organisations stood alongside people and kept our SMEs going. These were the organisations that came to people and said they would do what they could to keep them going. What of the banks that were bailed out by a previous Government and the vulture funds? What happened in our banking system this time was that the banks said they would extend the term of loans. They stopped people's payments but those customers will still have to pay off what they owe within the term of the loan. The banks did not, in fact, extend the term. They gave people a break of three or six months but they still have to pay back what they owe within the original term.

This meant that when the businesses reopened, they had higher rates and repayments.

The only financial institutions to stand up for people in the rural area of County Limerick that I come from were the credit unions. They told their members to come in and speak to them. The credit unions were not among the five financial institutions the Government named when it stated that it was going to help all businesses. I asked about that in the Dáil and was told the Government was speaking to credit unions but it did not include credit unions among the five banking institutions it was going to help. The credit unions are the only ones that helped people. Why is that the case? Members who walk into their credit unions are greeted and asked how they are rather than being referred to by a number, as is the case in the banking system. The banks have taken away everything personal from their customers and are trying to move everything online. We know that in a pandemic the best way forward is for the banking sector to engage at a local level. It used to be the case that customers knew their local bank manager and the staff of the local branch but now everything has been centralised and the banks want everything to be tap this, tap that and enter your password. Nobody in the banking system knows their customers. That is being taken away from the people working in the banking sector. The hierarchy in the banking sector want this but the people who work in the banks and do the real work on the ground do not.

Credit unions went to their customers and invited them in to meet. They delayed payments and agreed to extend loans such that customers could take a break for three months or six months and then restart the loan. In that way, when businesses reopened the repayments were the same and they were not paying a higher interest rate and did not have to cover the business within the term of the loan. That is what credit unions around Ireland did. What is the Government doing to credit unions? It is over-regulating them.

The other thing credit unions do for this country is that the boards of all credit unions are made up of volunteers from the locality in which a credit union is situated. They know the people around them. They know who is in trouble and who they can try to help. They have local knowledge, so their customers are not a number but, rather, are treated as people and as members of the credit union. Credit union members make up the volunteers on the boards of credit unions. That is why credit unions should be looked after, just as they have looked after their members. The history of the banking sector shows that at every chance the banks get, they close the door on their customers.

The Minister should consider which institutions have helped SMEs and young people to survive in a pandemic and which will future-proof SMEs coming out of the pandemic. The banks need to take a leaf out of the book of credit unions and make sure that the next generation can open their businesses and carry on banking locally. We need investment for all SMEs. Some 51% of people in Ireland are employed by SMEs. We saw the comical things that went on last night in respect of Covid passes into premises. That is fine for a business that has 20, 30, 40 or 50 employees but what about the person who has only one or two employees and now has to try to take on another employee? Small businesses such as that cannot find people to take jobs because people are already working. Those who are not working probably cannot go back to work because either they are not vaccinated due to the lack of vaccines or for some other reason.

This comes back to the those who are making a difference, namely, the self-employed who own the SMEs which employ 51% of people. Those employers go to their financial institutions which should be there to protect them. They should come to the Government. The Government should be there to protect SMEs and future-proof them. How did it future-proof them? It went to Europe, cap in hand, seeking €1 billion to restart the economy but only got €915 million, whereas other European countries with the same populations as Ireland asked for €10 billion and got €6.3 billion to future-proof their next generations and SMEs that were in trouble. What does that tell us? Maybe the Government needs to take a lesson from SMEs. They could let it know what it is really like to run a business.

I have been self-employed all my life. I am very lucky to have great employees and I consider them friends. They allow me to come to this House to fight the case for Limerick. We now have a voice that can counteract the bizarre stuff that is going on within the Government. I am fortunate to have a family that helps to run my business, which allows me to come to Dublin and give Limerick a true voice for the self-employed and other businesspeople. For generations, those people elected Deputies who they thought would represent the county but who, instead, came up here and signed documents and were told what to do. If a politician is being told what to do, he or she should not run for election. The only people who should tell Oireachtas Members what to do are those who elected us. We represent them to the best of our ability and that is what I am doing here.

I have been on the road since I was 15 years of age. I have and education of life. I have had hard years but I was surrounded by great people from financial institutions and SMEs who kept my business going through the hard times. I cannot say the same about the Government. Financial institutions such as credit unions, as well as hardware businesses and other SMEs that support all local business, are the only reason many SMEs are still operating.

I hope that all present listen to this. As things open up, I want people to remember who looked after them while Covid was here and to support local businesses. Revenue from online businesses does not come to one's local area; it goes to central parts. People should research where their money is going when they shop online. Creameries have closed down because although people thought they were supporting their local creameries, the money was going to a central fund outside the county. People need to look after SMEs and SMEs will look after them.

1:45 pm

Photo of Niamh SmythNiamh Smyth (Cavan-Monaghan, Fianna Fail)
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Fianna Fáil supports the Bill and its primary purpose, that is, to provide that any person or firm carrying on a business of providing credit, hire purchase or consumer hire agreements to consumers and other relevant persons will fall within the authorisation and regulatory remit of the Central Bank of Ireland. This will give the Central Bank the necessary legislative basis to apply its consumer protection code, or any other relevant code, to such firms. The Bill facilitates the implementation of key recommendations of the Tutty report on the operation of the PCP market, which stated that the Central Bank should apply relevant provisions of its consumer protection code, particularly the obligations on financial service providers under the code to assess the financial capacity of the consumer and the suitability of the product for the consumer prior to entering into a credit agreement, to all providers of hire purchase or PCP agreements and to consumers. All providers of PCP and similar agreements to consumers will now have to be authorised by the Central Bank, which will be able to apply its consumer protection code and other consumer protection powers to such firms. This will improve the level of protection available to the consumers of such agreements.

As part of the review of the regulation of personal contract plans, PCP, commissioned in 2018, Mr. Michael Tutty considered the contents and recommendations of an earlier Competition and Consumer Protection Commission study on personal contract plans, the Irish market, and separate Central Bank studies on the overview of the Irish PCP market. Following his considerations of the market and other considerations, the Tutty report recommended that further consumer protections in relation to PCP agreements be introduced. In particular, it recommended that the provision of the Central Bank consumer protection code, which requires lenders to assess the suitability of the product for the consumer and the availability and ability of the borrower to repay the debt over the duration of the credit agreement, should be extended to hire purchase and PCP agreements.

The implementation of that particular recommendation to all the providers of hire purchase and PCP agreements requires the legislation that is being brought forward now. It gives me the opportunity to state that it is a most welcome move by Government. In the past, we have seen people entering into PCP agreements, particularly with car companies when purchasing cars or vehicles, and not being so aware of the balloon payments due at the end of the contract. Often, it came as a nasty shock to consumers when that time came.

l have listened to some of the debate today. It is most disingenuous of Members of the Opposition to stand up in the House as though they are the only people that have come from the SME sector. There are many Members within Government and all three parties within Government who come from the SME sector and family-run businesses and who have the understanding. The Opposition Members do not have a monopoly in that. A very disingenuous account was given by the Opposition earlier.

Finally, I wish to state that I agree with the sentiment that our credit unions have been hugely important in providing personal contact with people in their local communities and financial support when others may not have been so willing to help people. Today's announcement and this legislation on consumer protection will ensure that people are protected and that they are granted loans that they have the capacity to repay. I thank the Minister for all of his work on the Bill.

Debate adjourned.

Sitting suspended at 2.44 p.m. and resumed at 2.48 p.m.