Written answers

Thursday, 5 May 2016

Department of Finance

Household Debt Statistics

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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13. To ask the Minister for Finance his views on private household debt being very heavily concentrated among the poorest households, given recent analysis by the Think-tank for Action on Social Change which shows that in 2013 37% of the value of debt was concentrated in the poorest net wealth decile (details supplied); and if he will make a statement on the matter. [9194/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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Firstly, I would highlight that people in debt or in danger of getting into debt can avail of the services of the Money Advice and Budgeting Service (MABS). This is a national, free, confidential and independent service. MABS has offices throughout the State.I would strongly suggest that anyone with debt or budgeting difficulties should approach their local MABS Office with a view to securing a confidential consultation with a money adviser to consider their particular circumstances and to seek advice if they wish to procure credit from a reputable lender or credit provider. 

A Personal Micro Credit Scheme has been developed under the auspices of the Citizens Information Board and the Social Finance Foundation, supported by the Department of Social Protection, and is currently being piloted in a number of Credit Unions. The scheme involves offering people receiving social welfare payments small affordable loans from credit unions as an alternative to moneylenders. A Personal Microcredit Implementation Group under the Department of Social Protection is progressing this initiative and 30 credit unions from around the country are participating. The Department of Finance is represented on this group. Loans range from €100 - €2,000 in value and are repayable over 6-24 months with loan repayments deducted automatically from the household budget scheme operated by the Department of Social Protection in conjunction with An Post. The interest rate is a maximum of 12% a year. The pilot is expected to be completed by the end of May 2016. I understand that a draft evaluation report on this scheme is currently being prepared by the Department of Social Protection and is nearing completion.  

In addition, the Central Bank has informed me that consumers of licensed moneylenders are protected by a range of provisions that moneylenders must adhere to including, but not limited to, the Consumer Protection Code for Licensed Moneylenders, the European Communities Consumer Credit Agreements Regulations 2010 and the Consumer Credit Act, 1995.

Currently, there are 40 moneylenders licensed to operate in the Republic of Ireland. Since the Central Bank assumed responsibility for the licensed moneylending sector in 2003, the number of licensed moneylenders has decreased and the Central Bank has not permitted an increase to the maximum APR. Details of the APRs and costs of credit permitted for each moneylender are disclosed on the Central Bank's public , which is available on its website. Furthermore, in November 2013, the Central Bank published a .

The Central Bank has confirmed that it has not licensed any moneylender to provide a 'pay-day loan' service such as exists in the UK (and were the subject of a recent price cap by the Financial Conduct Authority - FCA). The maximum costs of credit of Irish licensed moneylenders are significantly below the FCA cap, both in terms of total cost and on a daily interest rate basis (for those loans that would be comparable to the FCA's "included" loans).

Nonetheless, any consumer who has concerns in relation to how they have been treated by a licensed moneylender is encouraged to make a complaint to the licensed moneylender and, if not satisfied with the firm's response, to the Financial Services Ombudsman. The Financial Services Ombudsman investigates, in an impartial and independent manner, complaints from individual customers and small businesses who have unresolved disputes with financial service providers which are regulated by the Central Bank. Investigations by the Financial Services Ombudsman are free of charge to the customer. In addition, licensed moneylenders must treat complaints received from consumers in compliance with the provisions of the Consumer Protection Code for Licensed Moneylenders.

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