Minister of State Brian Hayes TD – Concluding Speech in the Dáil on 16 May 2012 on the Private Members’ Bill
‘Regulation of Debt Management Advisory Bill 2011’
I would like to thank all the Deputies for their useful contribution to this worthwhile debate on the regulation of debt advice and debt management firms. I welcome the consensus among all sides in the House that such companies should be regulated.
The Government is well aware of the financial difficulties which those in debt find themselves and appreciates that consumers will seek advice from whomever on how best to extricate themselves from these difficulties. It is the responsibility of the Government to ensure that those providing this advice are competent to do so and are held accountable.
As was mentioned by Minister of State Perry during last evening’s debate, the legislative amendments to debt management firms’ regulation, - which will be included at the Committee Stage of the Central Bank (Supervision and Enforcement) Bill, - will be robust and, again, I assure the House that the Central Bank will have the necessary powers to ensure compliance with the legislation.
I now turn to a number of issues which were raised by Deputies. During the debate, the Money Advice and Budgeting Service was mentioned on a number of occasions. The Government is aware of the sterling work carried out by this national, confidential and free service. My colleague, the Minister for Social Protection, Joan Burton TD has indicated that she is fully satisfied that MABS has sufficient resources to assist and support its clients. I am informed, based on the latest information available that, at the end of February 2012, the average waiting time from first point of contact to first appointment with a Money Adviser in MABS is some three and a half weeks. It is important to note that, during the waiting period, clients are assessed and those in need of immediate assistance are given a priority appointment; others are provided with assisted self-help to ensure that they have taken steps to assess their situation and, if appropriate, they are supported to take ‘holding action’ with their creditors.
It was mentioned in the debate that there is no law with regard to debt management companies. However, I would like to confirm again to the House that some debt management firms which process payments on behalf of clients are subject to regulation under the EU Payment Services Directive, which was transposed into Irish law. Under that Directive, any firm which provides payment services, as defined by the legislation, requires authorisation to trade from the Central Bank.
Deputies also mentioned that the level of mortgage debt. I addressed this issue in the Seanad yesterday. I can confirm to this House that the Government is fully conscious of the increasing stress – both financial and personal – that some households are facing arising from difficulties in meeting mortgage repayments. A number of important measures are in place that go some way to mitigate these difficulties. These include the Central Bank’s Code of Conduct on Mortgage Arrears, which among other things, requires each lender to put in place a mortgage arrears resolution process, provides that a lender must make every reasonable effort to agree an alternative payment arrangement with a co-operating borrower who is experiencing difficulties and places a moratorium on legal action by banks against co-operating borrowers. Under the Code, lenders must have at least one person employed in each branch who has specific responsibility for dealing with those persons in arrears and in pre-arrears. Lenders must also establish an Appeals Board to consider any appeals submitted by borrowers on foot of a decision made in their case.
On the question of fees charged by debt management companies, I am advised that there is a provision in the Central Bank (Supervision and Enforcement) Bill 2011 to make regulations about ‘giving information regarding costs and associated charges relating to financial services’. The Consumer Protection Code, which was revised with effect from January this year, also has provisions relating to the disclosure of fees etc. On enactment of the now proposed legislation, the Central Bank will have the power to make regulation, in consultation with the Minister for Finance, regarding the new provisions that relate to debt advice and debt management companies. This will include information with regard to charges and other costs.
In conclusion, Ceann Comhairle, I would again record the Government’s support for the objectives of the Private Members’ Bill, namely the regulation of debt advisory and management companies. Much work has already taken place to develop proposals for legislation in this area and further discussion will take place when the Government brings forward its proposals for a regulatory framework at the Committee Stage of the Central Bank (Supervision and Enforcement) Bill 2011.