Terry Leyden (Fianna Fail)

We await the report of National Irish Bank on how it has conducted its affairs over the past while.

In the report it is stated that regarding the sale of products to individuals it is very important that it is explained, particularly to elderly people who may not be conscious of the dangers, that if people sell their home to a bank for, say, €0.25 million, they could lose €18,000 per annum if they are in receipt of a non-contributory old age pension. It is a shock to learn that is the case. Credit is due to public broadcasters such as Mr. Joe Duffy of RTE's "Liveline" who exposed this and brought it to public attention. This demonstrates that it is worthwhile having a fearless public service broadcasting organisation.

During the course of the discussion on 12 May I referred to Shared Home Investment Plan Limited. I stated that I believed it was not properly informing its clients. SHIP is just one of the organisations involved in this area. I do not know who owns SHIP, whether it is owned by a bank or by individuals or private companies. It is a very reputable company. Its product can be very beneficial for those in receipt of contributory pensions who want to enjoy life, lead the life of a millionaire and head off to the Bahamas or go on a world cruise. It is possible for them to use the money obtained for the equity in their house to enjoy themselves rather than leaving it to be inherited by somebody who is not doing much for them. It is a very attractive scheme. SHIP has taken exception to the concerns I expressed regarding the holders of non-contributory State pensions and the impact equity release plans can have on eligibility for those benefits. In a letter to me the Chairman of SHIP, Mr. William Kane stated:

I wish to assure you that none of SHIP's clients to date have been affected adversely in this regard and as part of our compulsory consultation with clients and their families this issue is now discussed in order that there is no confusion. In addition our letter of offer which is sent to clients and their solicitors contains a specific clause highlighting the issue in question. I hope that you are therefore reassured that our clients are kept fully informed in this regard. I would welcome an opportunity to meet with you to address any other queries you might have. I look forward to hearing from you.

I have read this into the record because "Liveline" could be challenged or a claim for damages made against it by the companies mentioned. We enjoy full parliamentary privilege which we should use with caution and respect. I am being very careful. I made the point that people should be warned and I have read the response from the company in question. I suggest that when non-contributory pensions are sent out they should be accompanied by an explanatory leaflet explaining that if beneficiaries receive a large amount of capital assistance from a bank or other organisation they will lose benefits such as sickness benefit, old age pension and so on. It is a major blow to lose one's medical card and other benefits, simply because one wants to get this large amount of money. The Minister is aware that inflation is currently very low. The return on one's investment from the banks is practically nil, at approximately 1%. We should be alerted to this matter, in the circumstances. It is the responsibility of the Department of Social and Family Affairs and the Minister, Deputy Coughlan. I would appreciate if the Minister for Finance's senior officials could bring the matter to the attention of the Minister for Social and Family Affairs. I accept that SHIP and other organisations may be informing people of their responsibilities and the danger of losing their benefits. I ask the Minister to provide copies of the leaflet to warn everyone about the problems in this regard. I do not deny that the service, which is being provided by an honourable registered company, can be beneficial to many people.

I cannot say I am particularly satisfied with IFSRA. The Minister, Senators Ross and O'Toole and others have said we have an opportunity to give the authority teeth. We should allow it to take action, to impose penalties and to ensure that organisations face some sanctions if they do not fulfil their responsibilities. There are no sanctions at present. Financial institutions can lodge a voluntary contribution to the Central Bank, to be returned in the event of it being exonerated in any way or if there is some excuse for its activities. The Minister said today that he proposes to amend the Bill to allow IFSRA to be more effective. It cannot operate in a productive manner if it cannot impose restrictions and sanctions.

IFSRA was established independent of the Central Bank to try to achieve more control of financial institutions. It may be doing a good job, but the Minister cannot be satisfied that it did not detect this abuse of the system, but instead had to depend on journalists. If a whistleblower provided such information to Senators, I am sure they would use the facilities available to them to bring the matter to the attention of the public. RTE's decision to run with the story was quite courageous in the circumstances. In fairness to AIB, it put up its hands and admitted that problems had been ongoing for a considerable amount of time and there is a possibility it will give an apology to its customers. Mistakes are made by every organisation and I do not argue that mistakes were not made in this instance. Given that the mistakes have been detected, we have an opportunity to make changes.

I am not sure whether IFSRA has control over the credit card business of organisations. Credit cards can be open to abuse. Many more safeguards are needed in respect of the use of credit cards. I cannot understand why so much fraud is allowed to take place, given that it is possible to add security features to credit cards. I am not sure if IFSRA has any control in this regard. If not, we should consider examining this area. I recently received returns on my credit card from companies that were not registered. I did not know who they were, as they were not registered as limited liability companies and they did not supply telephone numbers. It is confusing to receive such demands. I thank the Cathaoirleach for his patience. I thank the Minister for attending this debate.