Written answers

Wednesday, 21 March 2012

Department of Finance

Financial Services Regulation

9:00 pm

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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Question 79: To ask the Minister for Finance the protection he and the Central Bank are going to provide to persons who use bill payment companies that enter receivership (details supplied); the strategies in place for persons who are not [i]au fait[/i] with using bank accounts or online services to pay for bills or who simply do not have a bank account; if it is possible to promote credit unions and post office service for these persons; his views on the viability of bill payment companies here at the moment; and if he will make a statement on the matter. [15633/12]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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Currently there is no regime in place targeting specifically, the authorization and supervision of businesses labeled "bill payment", "debt management" or "debt advice". Depending on the exact business model undertaken by a firm, it may or may not be subject to regulation by the Central Bank. The Central Bank has advised me that, following the failure of a firm in mid-2011, the Bank inspected the bill payment and debt management industry to assess whether firms providing these services are carrying out an activity that falls to be regulated by the Central Bank and whether consumer funds may be at risk. Following identification of a dozen companies providing these services, the first phase of the Central Bank's review has concluded. The Central Bank has written to a number of companies notifying them that their activities are subject to regulation by the Bank and requiring that immediate steps be taken to provide additional protection to client funds.

The Central Bank has publicly advised consumers (in a press release issued on 24 January 2012) to be aware that the bill payment and debt management companies they are using may not be regulated by the Central Bank. The Bank has advised me that, where consumers provide funds to a company that is not regulated by them for onward payment to a creditor, the handling of this money would not be subject to segregation and safeguarding rules and as such, consumers' funds would not be protected. The firms referred to by the Deputy in her question were not authorised by the Central Bank.

The report on the strategy for financial inclusion which was published on my Department's website identified that the credit unions have potential to play a key role in the provision of a basic payment account and in the promotion of financial inclusion in the future. A pilot basic payment account aimed at the financially excluded will commence in three locations in the State in June 2012. Arising from the evaluation of this pilot stage, it is intended that the basic payment account will be provided nationally to certain persons in 2013.

The Deputy will also be aware that the Money Advice and Budgeting Service provide a debt help and money management service. MABS have offices located throughout the country and their service is free of charge.

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