Written answers

Wednesday, 26 September 2007

Department of Social and Family Affairs

Debt Issues

10:00 pm

Photo of Seán SherlockSeán Sherlock (Cork East, Labour)
Link to this: Individually | In context

Question 113: To ask the Minister for Social and Family Affairs the progress made in regard to his consideration of the research commissioned by the Financial Regulator and the Combat Poverty Agency on the nature and extent of debt incurred by low income families; and if he will make a statement on the matter. [20730/07]

Photo of John PerryJohn Perry (Sligo-North Leitrim, Fine Gael)
Link to this: Individually | In context

Question 126: To ask the Minister for Social and Family Affairs the strategies he will put in place in view of the research commissioned by the Financial Regulator and the Combat Poverty Agency on the nature and extent of debt incurred by low income families, as well as recent findings by the Irish League of Credit Unions, to assist people on low incomes in accessing cheap forms of credit; and if he will make a statement on the matter. [20779/07]

Photo of Phil HoganPhil Hogan (Carlow-Kilkenny, Fine Gael)
Link to this: Individually | In context

Question 140: To ask the Minister for Social and Family Affairs when he will publish legislation to establish the Money Advice and Budgeting Service on a statutory footing; and if he will make a statement on the matter. [20778/07]

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context

Question 157: To ask the Minister for Social and Family Affairs the steps he will take to fulfil the commitment in the Agreed Programme for Government whereby the Money Advice and Budgeting Service will be given a central role in increasing access to affordable credit for low income earners and social welfare customers; and if he will make a statement on the matter. [20811/07]

Photo of Seán SherlockSeán Sherlock (Cork East, Labour)
Link to this: Individually | In context

Question 173: To ask the Minister for Social and Family Affairs when the promised new legislation to place the Money Advice and Budgeting Service on a statutory basis will be published; the principal areas in which it will differ from the Bill published in 2002; and if he will make a statement on the matter. [20731/07]

Photo of Martin CullenMartin Cullen (Waterford, Fianna Fail)
Link to this: Individually | In context

I propose to take Questions Nos. 113, 126, 140, 157 and 173 together.

The Money Advice and Budgeting Service (MABS) provides assistance to people who are over-indebted and need help and advice in coping with debt problems. There are 53 independent companies nationwide employing some 230 money advice staff who deliver the service at a local level. Many local voluntary and statutory bodies, such as the Society of St. Vincent de Paul and the credit unions work closely with the programme.

Last year, MABS provided services to almost 12,500 new clients throughout the country. To date, this year some 8,300 new clients have approached the service. The number of active cases at the end of August was 18,400. The demand for the service can be attributed to the increase in the availability of credit generally and to the quality of the service provided by MABS advisors. In 2006, €16.4 million was provided to fund the service and in 2007 the annual allocation was increased to €17.67 million to assist the MABS in dealing with its workload.

The issues that give rise to problems of over-indebtedness for people are highly complex as the report of the Combat Poverty Agency for the Financial Regulator on Financial Exclusion in Ireland illustrates. The cost and availability of credit for people on low incomes and the barriers they face in accessing mainstream and cheap forms of credit add to the difficulties people encounter in managing their finances.

I am particularly concerned about the unacceptably high level of interest rates currently being charged by some financial institutions, loan companies and by legal moneylenders in situations where people have no alternative sources of credit available to them. My concerns, in this regard, are borne out by the 2005 UCC Working Paper "Meeting the Credit Needs of Low-Income Groups: Credit Unions versus Moneylenders" and the recent Financial Regulator's Report on the Licensed Money Lending Industry in Ireland.

It shows that moneylenders may be charging interest rates of up to 188%. Most significantly, 71% of people surveyed in the latter report did not know what interest they were paying on their loans.

The issues in this policy area are complex. The regulation of money lending comes under the Consumer Credit Act, 1995 and the licensing of moneylenders is a statutory responsibility of the Financial Regulator. My view is that MABS has a unique and expert contribution to make on behalf of people on low incomes in shaping the strategies that need to be put in place, for example, by the providers of payment services such as the Banks and Credit unions to ensure greater financial inclusion in Ireland. Officials of my Department continue to engage with the Department of Finance on the issues involved. Furthermore they are also consulting with the Financial Regulator and other key interests on the options available to me to strengthen the role of MABS in tackling the barriers which arise for people on low incomes in getting access to the full range of mainstream financial services that is available to the wider community.

In line with the commitment in the Programme for Government, I am developing proposals to establish a new structure for the MABS geared to meet the needs of people with debt difficulties in today's society. Initiatives to improve the situation of people on low incomes in securing access to affordable credit are a priority consideration in my approach to policy. I intend to bring the proposals to the Government as soon as possible in the coming months.

My proposals will build on the best features of the MABS model of service to the public. They involve the continuation of local voluntary involvement in the MABS service, with strong national leadership to ensure a high quality, coordinated budgeting and advice service providing strong and confidential support for its clients.

The proposals take account of the significant developments which have taken place in MABS since legislation on the matter was published in 2002. They take account of best practice in corporate governance for a customer focussed service that provides value for money for the taxpayers investment and meets the challenges posed by the rapidly changing face of debt in 21st century Ireland.

Comments

No comments

Log in or join to post a public comment.