Fianna Fáil Finance Spokesman Michael McGrath has today officially moved the Regulation of Debt Management Advisors Bill 2011 in the Dáil and has again urged the Government accept the legislation to ensure strict controls are brought in to regulate debt management advisors and protect consumers.
Deputy McGrath said: ‘The area of Debt Management Advice and Household Budgeting Services is entirely unregulated at present and is a growing cause of concern. It is a sector that has really mushroomed in recent years as personal debt levels increased substantially. Many distressed borrowers have signed up to seemingly attractive offerings of some providers in this area and found themselves in further financial trouble and in a less secure situation.
‘This issue really captured people’s attention following the collapse of Home Payments Limited over the summer. The immediate collapse plunged many people into confusion and fear about money they had paid to the company to manage their bills and other debts. At this point, we simply do not know how many other consumers are at the mercy of unregulated service providers.
‘While there is a legitimate role for professional debt advisory services, the area is urgently in need of regulation. This bill requires debt management advisors to be regulated by the Central Bank and prohibits such advisors from handling client monies themselves. I would like to compliment Senator Thomas Byrne for drafting the Bill and the Fianna Fáil policy group on mortgage arrears and personal debt for their input. The Bill is part of a package of measures being put forward by Fianna Fáil to reform Ireland’s personal insolvency regime and to secure the family home.
‘I am asking the Minister to accept this common sense proposal which is being brought to the Dáil in good faith to ensure people experiencing personal debt problems are protected when they avail of the services of a debt management company or household budgeting service,’ concluded Deputy McGrath.
The new Bill provides that:
1. A Debt Management Advisor (DMA) would be subject to regulation by the Central Bank and required to have an authorisation.
2. A DMA would be required to set out all fees at the point of engagement.
3. A Debt Management company would inform all potential clients of the services offered by the Money, Advice and Budgeting Service (MABS).
4. Fianna Fáil would prohibit DMA’s from handling client monies themselves. We believe that in the absence of any system of bonds or the type of regulation that solicitors’ client accounts are subject to, it would be inappropriate for DMA’s to hold a client’s money. The Money Advice and Budgeting Service would be excluded from this prohibition.
5. The Central Bank shall publish a Code of Practice concerning Debt Management Advice within six months of the legislation coming into force.
6. The legislation sets out the penalties that apply to persons found guilty of an offence.