Wednesday, 11 December 2013
Credit Reporting Bill 2012: Second Stage
I welcome the Minister again. It is not that often that a piece of financial legislation meets general approval from both Houses but it seems to be the case on this occasion. I do not intend to delay the Bill, as it is a good piece of legislation. Perhaps it was required in the past, and I have argued before that the lack of legislation in the financial area was one of the reasons we ended up in such a fantastic mess. It is amazing that coming to the end of 2013, coming to midway through the second decade of the century, we are only putting this type of very important legislation on a statutory footing. It is a deficit that has to be addressed in the interest of the consumer. I support Senator O'Brien's comments in that any fee should not be put down as a box to be ticked on a form by a financial institution, with the cost passed to the consumer.
We can deal with particular sections on Committee Stage. Section 30 deals with the power of banks to produce credit scores. I welcome the fact that a consumer will get one copy per year if requested but the record should be user-friendly. Far too often people who discuss such matters know about banking and finance but they do not comprehend that the public may not be able to make head or tail of it. I am not talking about dumbing down the report but it must be user-friendly. A person should be able to analyse the report and see exactly what it states. More often than not, this aspect is overlooked.
Information will be made available to financial institutions and there is an obligation on them to request that information. If the Central Bank sends a report to a financial institution, is there a follow-up if it is obvious that somebody is overly indebted? Does the Central Bank have another role when it is clear that a loan of a certain amount was made?
Has any analysis been made to determine how a financial institution allowed this person who is obviously over-indebted to borrow that amount of money? I am not sure this is within the scope of the legislation, but perhaps it should be. It would act as a brake on financial institutions and we would never again see what happened with Anglo Irish Bank and other institutions. Perhaps it does not form part of the Bill, but I ask whether it should. If it should form part of the Bill, how do we factor it in?
I am not sure I agree with Senator Darragh O'Brien's point on guarantors. If somebody agrees to be a guarantor of a loan, the credit history of the borrower should be made known to him or her. At least, if that box was not ticked and the borrower did not agree to releasing information on his or her credit history, it would set off alarm bells for the guarantor. It would reinforce the point for him or her that he or she would be responsible if the loan repayments were not made.
The lower limit in the legislation is set at €500. The limits for credit cards can be above that amount or equal to it. Some people use credit cards very prudently which is very wise, given the rates of interest payable on them. Some use a credit card to pay for small items like cinema tickets, make online purchases and so forth and do not use their cards on a daily basis. If these small amounts are not cleared in time, will that go against a person in his or her credit history? Will a sum of €50 or €70 work against an individual? A person could have a very good credit history in the case of larger credit items like mortgages and so forth, but failing to pay smaller bills could spoil his or her credit history in an unfair way.