David Norris (Independent) | Oireachtas source

I commend Senator MacSharry on bringing this matter before the House, and I note with satisfaction the presence of the Minister because it is good to have a senior Cabinet Minister with us in Seanad Éireann for this kind of debate. I also welcome the Minister's attitude towards the entire issue of moneylending, one he made clear during the passage of the insolvency legislation, when I and others raised this question. It surely must be a concern, however, that there is in some areas, especially in our cities, what amounts to a crisis in terms of moneylending, in particular illegal moneylending. That this is not being satisfactorily addressed at present must be clear from the fact that there has not been a single instance since 2005 of an illegal moneylender facing serious charges, being jailed or fined substantially. The practice is widespread and we know from listening to people on the wireless they have immense difficulty from the pressure caused. I recall listening during the past six months to a woman who was put under such pressure.

I note the occupant of the ministerial chair has changed. I welcome the Minister of State, Deputy McGinley, and ask him to pass on to the Minister, Deputy Shatter, the recommendations I shall make, particularly given that the Minister who has just left indicated his strong support for the views of the Society of St. Vincent de Paul. Coincidentally, today I received a magazine from that society which makes clear recommendations. It concurs with my view that there is a crisis. As my time is limited, I wish to put those remarks immediately on the record of the House.

To reiterate, the St. Vincent de Paul Society indicates that a crisis exists. The contradiction, which is clear to anybody, is that it is the most vulnerable people who are engaging in the practice of the most dangerous form of borrowing money. Very often they cannot repay it properly. Recommendation No. 1 of the St. Vincent de Paul Society is that the Central Bank be asked to publish baseline data on the number of loans and the number of households with such loans in the Republic of Ireland. The second recommendation is that the total cost of credit should be emphasised in loan agreements. In my view, we should also include the APR figure. In his speech the Minister noted there were some unscrupulous people who charged more than 100%. They are not only the unscrupulous or the unlicensed, however. Licensed moneylenders, including the largest one, Provident Financial, which has 75,000 loans extended in this country, charges up to 187% per annum, yet this is not regarded as an offence although we complain about 20% or 17.5% being charged on credit cards. This is a very serious situation.

It is recommended that moneylending companies should not be permitted to offer loans that are more four times the proven weekly income. That would protect people who cannot afford to make the repayments. Often these are not huge amounts - perhaps €500 to cover a child's first Communion - and it seems all right that people should pay €50 a week. However, they may not be able to afford this sum. It looks all right at the time of the crisis or emergency that is often associated with a family event. The society also seeks greater regulation regarding the amount which can be borrowed and how often a loan can be obtained. It suggests a minimum time delay between one loan and another and that there be only one loan per adult in a household. These are all obvious suggestions and should be kept before the mind of the Minister.

Moneylending companies should be made responsible for the lending and payment collection activities of their agents. We have had the example of a gentleman known as "The Viper", who started a debt collection agency having had a long career as a violent criminal. People are absolutely terrified of him. All he has to do is put a sign on his van - "The Viper Collects", or whatever it may be - drive in front of a person's house and I can guarantee that person will pay up pretty quickly.

There is a recommendation that the Central Bank should produce information brochures and offer financial education. FLAC has done a very good job here, with an excellent brochure, "Moneylending and the Law". MABS also does this work.

There is a crisis. It has not been addressed satisfactorily, which is clearly evident from the widescale extortionate interest rates being charged with no one being convicted of these offences.
Perhaps the Minister's speech is a little out of date. My colleague and friend, Senator Barrett, suggested that I should table an amendment to the Minister's speech because the copy I have states clearly at the top: "Speech by Minister for Justice, Second Stage Seanad Éireann, 22 May 2011". That is I think two years ago, so it may be slightly out of date, it could, of course, also be a printing error.

A report on the licensed moneylending industry in March 2007 by the Financial Regulator states:

In 2005, licensed moneylenders had approximately 300,000 customers. This represents approximately 10% of the population of the Republic of Ireland in 2005 over the age of 20 years.

I was surprised at the number of people involved, but I was even more surprised to discover that 89% of the customers were satisfied. That cannot represent naivety, particularly when one considers that 50% of them gave them ten out of ten. It is obvious to me that actually the problems arise in the area of unlicensed and unregulated loan sharks.

When I noticed the Minister was leaving I had to frontload some of my remarks. I heard a woman on the radio speaking about taking her life because she had borrowed in order to help her son with a deposit. She had sold all her furniture. She had no food in the house. She was sleeping on the floor because she was paying enormous sums in interest. To my mind that is not tolerable. For that reason I am glad that Senator MacSharry introduced this legislation. The Minister is slightly contradictory and states the Bill replicates offences that are already on the Statute Book, namely, blackmail, extortion, demanding money with menaces and so on. He further states that it will have the contradictory effect. I am left to wonder if these provisions also have a contradictory effect.

I congratulate Senator MacSharry. He has raised an important matter. I am not satisfied that it is being effectively dealt with. We owe the most vulnerable in our society the protection of the law. It appears that legal moneylenders, in spite of their enormous rates of interest, are providing a service that people are capable of dealing with but the illegal moneylenders are bleeding vulnerable people to death in some instances.