Róisín Shortall (Dublin North West, Labour)
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Question 104: To ask the Minister for Finance his views on the growing number of financial services intermediaries who are offering debt-handling services at a price to vulnerable mortgage holders who are in arrears and other people in debt; and his plans to regulate or curtail these services. [16971/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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My understanding is that the Deputy may be referring to the provision of a debt management service whereby a firm acts as a "middleman" between an individual and his or her creditors. In such cases the debt management service receives, say, a fixed monthly sum from the individual and in return pays off various debts of the individual on a scheduled basis. For its service, the firm receives a commission, usually a percentage of the fixed sum from the individual. The firm may also benefit from rebates from the creditors. Alternatively, individuals in arrears may avail of a debt consolidation loan to pay off all of his or her existing debt and replace it with a single loan and single payment.

The Deputy may wish to note that the provision of debt handling and debt recovery services are not activities which require an authorisation or licence from the Financial Regulator. I do not have plans to introduce new regulations for debt handing and debt recovery services as there are important safeguards already in place for consumers in the financial sector where a loan was provided by a regulated financial services provider subject to the Consumer Credit Act 1995 and the Financial Regulator's Consumer Protection Code. In circumstances that the creditor is outside the regulated financial sector and is not subject to the requirements applying in the financial sector it is important to highlight that as far as the debt recovery process is concerned under Section 11 of the Non-Fatal Offences Against the Person Act 1997 it is an offence to demand payment of a debt in a way designed to alarm, distress or humiliate.

As far as availability and independent advice and assistance for consumers in debt or in danger of falling into debt, the Deputy will be aware that the Money Advice and Budgeting Service (MABS) provided under the aegis of my colleague the Minister for Social and Family Affairs provides a national, free, confidential and expert service. The location of its offices throughout Ireland and other details may be obtained through its website www.mabs.ie. Its services may also be availed of via its helpline 1890283438. I understand that MABS and the Irish Banking Federation are advancing a joint Protocol on Debt Management which is designed to further improve the operational effectiveness of the IBF Creditor / MABS Adviser engagement.

In addition, the Deputy may wish to note Financial Regulator's Consumer Protection Code provides that where a mortgage is offered to a consumer for the purpose of consolidating other loans or credit facilities, the regulated entity must provide the consumer with a written indicative comparison of the total cost of continuing with the existing facilities and the total cost of the consolidated facility on offer. In the context of providing any consolidated loan the intermediary is of course also subject to the general principles of the Code.