Fianna Fáil Finance Spokesperson Michael McGrath commented: ‘Fianna Fáil is bringing this legislation before the Dáil this week to put the spotlight on a sector which has mushroomed in recent times and that remains unregulated. The lack of regulation has resulted in consumers’ money being put at unnecessary risk. Vulnerable consumers are being taken advantage of by some unscrupulous, cowboy operators in this area.
“In our view, there is a legitimate role for professional advisors in this area but the sector is urgently in need of regulation to ensure consumers are protected. The Regulation of Debt Management Advisors Bill requires those offering debt advice and household budgeting services to be regulated by the Central Bank.
“Many distressed borrowers have signed up to seemingly attractive offerings of some providers in this area and subsequently found themselves in further financial trouble and in a less secure situation. Up-front fees of up to €750 are common with debt advisors with on-going monthly fees of 15 per cent of the customer’s payment going to the advisory firm in some cases.
“In some instances, the first 3 months payments may go to the advisor with the customer often unaware that they are continuing to rack up additional interest and penalties. Our bill would require such advisors to set out all fees clearly at the point of engagement. The sector would be governed by a Code of Conduct to be published by the Central Bank.
“There have been high profile cases such as the collapse of Home Payments Limited in August 2011, which owed customers €6.17m, which have highlighted the disastrous consequences for ordinary people when something goes wrong in a sector that is entirely unregulated.’
“I would like to thank Senator Thomas Byrne for his work in drafting this bill. Fianna Fáil wants to ensure people experiencing personal debt problems are protected when they avail of the services of a debt management company or household budgeting service. I very much hope the government will accept this bill tonight in the interests of Irish consumers.”