John Gerard Hanafin (Fianna Fail)

I also welcome the Minister of State to the House and I welcome the Consumer Protection Bill. The idea of such legislation is fortuitous at this time. With so much money and affluence in the country, we must ensure people receive value for money, are not mislead and that even companies with a good track record are kept in line. We know €10 billion will come on stream through the special savings incentive accounts shortly. However, many issues continue to require attention and it is good this Bill has been introduced.

I check the Internet daily and receive an offer from a poor country in west Africa where a recent coup has taken place. It states if I supply my bank account details, vast sums of money will be forwarded because the new government will take it off the incumbent. It is a simple offer, many different types of which exist and we all receive them. Even though it is international and borderless, I would like to see the new national consumer agency act in conjunction with other agencies to ensure fewer such offers are received. Unfortunately, people will fall for unscrupulous scams. We saw it recently with pyramid selling in Cork.

On a number of occasions today, oil prices were mentioned. In particular we discussed the service station on Usher's Quay which was mentioned twice during this debate. If oil is sold at €1.35 per litre on Usher's Quay and is available at 95 cent in Urlingford, it means a 40 cent differential per litre. This amounts to €1.70 or €1.80 per gallon or approximately €100 per barrel. This means a price of $130 per barrel, which is twice its price. Why is this allowed? Rather than imposing a price order, it should be examined.

As I stated previously, it is the first service station met by a lorry or a car coming off a ferry. Many people will wait to buy petrol until they arrive in Ireland because it is supposed to be significantly cheaper given the sterling differential. They are salted by the first filling station they come across. This has created a great deal of annoyance.

Recently, auctioneering firms have been criticised. I gladly note one auctioneering firm was made to account for misstating the size of a property by 1,800 sq. ft. It was brought to court and made pay. We are becoming more conscious of our rights under consumer legislation.

Moneylending was also mentioned. The least well-off in our society are those who still pay extortionate rates of approximately 20% at a time when European Central Bank rates are 3.5% and 4%. Technically, these people can least afford such high rates but seem to manage to afford it. It is no surprise that the Nobel peace prize went to a man who provided funding for people with little or low income in countries with a percentage of Ireland's wealth. We should ensure that moneylenders give the full extent of the cost of lending money and seek alternatives. They are in it for a profit and must be making a good one. Perhaps State agencies could provide the money at a lower rate and provide a public service. I am certain the sums involved are small.

Interesting and positive guidelines were published today by the Financial Regulator. It warns homeowners to consider their options and obtain independent advice before using an equity release scheme on their home. The guide to equity release explains the different types of equity release products available and the main issues to consider. Lifetime mortgages and home reversion schemes are designed for homeowners over 60 years of age and give people the option of getting a lump sum or regular income without having to move out of their home. When these were first launched I thought they were an excellent idea. However, people must be made aware and one of the benefits of this Bill and the establishment of the national consumer agency is that it will educate people.

According to the consumer director, Mary O'Dea:

Our research shows that almost 4 in 10 consumers aged over 50 would consider releasing equity from their homes at some point in the future. The benefit of these schemes is that they provide you with cash to meet your current needs, which is particularly appealing if you are living on a tight budget and your home is worth a lot of money now. But the risk is that you may not have enough money in the future to meet your long-term health or care needs. If you want to release some of the value of your home, consider the cost carefully and remember there are different risks than with other financial products. Any financial decisions you make at 60 can look very different when you are 75 and your needs and circumstances may have changed. Make sure to get independent legal and financial advice and consider whether you should talk over your plans with a family member.

Think carefully about the long-term costs and risks. With a lifetime mortgage the longer the mortgage lasts the more it costs. You could end up owing over €245,000 in 15 years time on a lifetime mortgage that would give you €100,000 in cash today. This is because with this type of equity release you make no repayments until your home is sold and the interest is added to the amount you owe, so it builds up quickly and the amount you eventually owe could be close to or equal to the value of your home. If you needed money for long-term care later on, you could find that there is very little value left in your home to pay for it.

Home reversion schemes involve selling part of your home for a cash price. You are not borrowing against the value of your home but are actually selling part of it to raise cash now.

Typically with a home reversion scheme you will get less than the market value of the portion of the house you sell. For example if your home is worth €500,000 and you sell half of it you could get between €112,000 and €146,000 in cash rather than the €250,000 market value of a half share.

The Financial Regulator urges people considering equity release products to make sure they consider the following main issues and risks: First, any lump sum or income raised through an equity release scheme could affect entitlement to State benefits such as the means-tested State pension. Second, the money may not last for one's lifetime, and its value will gradually fall due to inflation. There is a need to consider future financial needs and also long-term health and care needs. Third, raising cash through equity release will mean there is a lot less, or perhaps nothing at all, left for beneficiaries. If this is a cause of concern it should be discussed with one's family or a solicitor. Fourth, there is a need to consider how much money is really needed. Not all of these points will affect everybody but they will affect some, therefore, I welcome that part of the Bill which concerns education and the dissemination of information, which is opportune.

This consumer protection legislation will extend new protection for consumers and will overhaul structures in what will be the biggest reform in this area for 30 years. It will help to ensure Ireland has one of the strongest and most modern consumer protections in the world. The Consumer Protection Bill 2007 includes bans and tough sanctions for 31 anti-consumer activities including pyramid selling, prize bond scams and persistent cold calling of consumers, for which some communications companies, particularly telephone companies, are particularly at fault, having caused much concern to people.

It will also formally establish the new national consumer agency, which will have the funding and power to act forcibly on behalf of consumers. It is the first major consumer legislation in 30 years and will replace legislation which is long outdated, including two Acts which have been in place for over 100 years. A total of ten older Acts are being repealed or modernised by the new Bill. The consumer agency will be a powerful advocate on behalf on consumers because it will have the resources to contribute on all issues of real concern to consumers. I welcome the Bill.