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Minister for Social and Family Affairs
The Money Advice and Budgeting Service (MABS)
provides assistance to people who are over-indebted and need help and
advice in coping with debt problems. There are 52 independent companies
nation-wide operating the service. The credit union movement has been a
key partner in MABS since its inception and their involvement and
support is central to the development and success of the service. Other
voluntary and statutory bodies, such as the Society of St. Vincent de
Paul, the Community Welfare Service, Citizens Information Centres,
Centres for the Unemployed and local authorities work closely with the
programme.
In 2001 MABS dealt with some 9,000 new clients. In 2006, it provided
services to some 12,500 new clients and the number of active cases at
the end of the year was some 14,900. The growth in demand for the
service can be attributed to the increase in the availability of credit
generally and to the quality of the service provided by MABS advisors.
In 2006, €16.4 million was provided to fund the service and in 2007 I
have further increased the annual allocation to €17.67 million to assist
the MABS in dealing with its workload.
The issues that give rise to problems of over-indebtedness for people
are highly complex.
The cost and availability of credit for people on low incomes and the
barriers they face in accessing mainstream and cheap forms of credit add
to the difficulties these people encounter in managing their finances. I
am particularly concerned about the unacceptably high level of interest
rates currently being charged by some financial institutions, loan
companies and by legal moneylenders in situations where people have no
alternative sources of credit available to them
I have held discussions with a number of groups including the Irish
League of Credit Unions, the Irish Bankers Federation and the Financial
Regulator about these issues. The outcome of these consultations, the
Combat Poverty Report, 'Financial Exclusion in
Ireland - An Exploratory Study and Policy Review' commissioned by the
Financial Regulator, together with the statistical data now emerging
from the new MABSIS information system will make a significant
contribution to our knowledge about the problems of debt in Ireland.
They will inform the strategies that need to be put in place by both
Government and the providers of payment services such as the Banks and
Credit unions to promote greater financial inclusion in Ireland.
I plan to bring proposals to the Government shortly to establish the
MABS on a statutory basis. My proposals for legislation will build on
the best features of the MABS model of service to the public and will
include measures to address concerns about excessive loan charges for
people on low incomes. The proposals will combine a continuation of
local voluntary involvement with strong national leadership and ensure a
high quality, coordinated budgeting and advice service for the future,
in particular for people on low incomes. The proposals for the new
legislation will take account of the significant developments which have
taken place in MABS since the previous Bill was published in 2002.
The proposals entail a number of specific actions to address some of the
issues that leave people on low incomes vulnerable to high cost credit
charges. While the regulation of money lending comes under the Consumer
Credit Act, 1995 and the licensing of moneylenders is a statutory
responsibility of the Financial Regulator, my view is that the
MABS has a key role to play in informing the licensing process in these
circumstances. Officials of my Department are working closely with the
Financial Regulator and with the Department of Finance on the detailed
legislative provisions required to give MABS an input into these
matters.
This work is nearing completion and I plan to bring the proposals to
Government shortly. They will be informed by the consultations I have
had with a range of individuals as well as the expert views of key MABS
interests including money advisors, MABS voluntary boards of management
and other stakeholders such as the credit union movement. The new
legislation will take account of best practice in corporate governance
for a customer focussed service that provides value for money for the
taxpayers investment and meets the challenges posed by the rapidly
changing face of debt in 21st century Ireland. |
