Fianna Fáil Finance Spokesman Michael McGrath has welcomed the statement by the Minister for Finance Michael Noonan TD that he intends to regulate all firms offering debt management and debt advice services. Minister Noonan stated his intention to regulate the sector in a written Dáil reply to Deputy McGrath last week.
Deputy McGrath stated, “On 18 August 2011, I wrote to Minister Noonan and the Government Chief Whip on the need to bring firms providing debt management and debt advice services under the regulation of the Central Bank. I am pleased that the Government has now finally agreed to act on this issue. In a Dáil reply to me last week, Minister Noonan confirmed ‘On the basis of advice received from the Central Bank and my officials I have agreed that all debt management and debt advice services of firms should be subject to regulation. I have has asked my officials to prepare the necessary legislation which , subject to Government approval, will be brought forward as a Committee Stage amendment to the Central Bank (Supervision and Enforcement) Bill 2011.’
“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 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 last summer. In recent weeks, it is known that the Central Bank has intervened in at least two other cases recently, advising the customers of one firm to suspend any further payments to them.
“If the Minister wishes to introduce regulation to this area quickly, he could accept the Bill published by Fianna Fáil last summer – Regulation of Debt Management Advisors Bill which is sitting on the Dáil Order Paper. Recent lessons have highlighted the need for customers of such firms to be protected in law.
“I welcome the announcement by Minister Noonan that he agrees with the need to regulate the sector. Fianna Fáil will continue to engage constructively on this issue to ensure that the necessary regulation is introduced as quickly as possible.”
The new Fianna Fáil 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.