THE CHIEF executive of the National Consumer Agency, Ann Fitzgerald, has called on the Government to fast-track legislation covering money management companies and warned that thousands of people could be exposed to serious financial losses unless the sector is regulated.
She was speaking in the wake of the Home Payments closure on Wednesday which left 2,300 consumers exposed to financial losses of up to €12,000.
The family firm, founded in 1963, offered household budgeting and saving services to customers, many of whom were on low incomes. It said it was a victim of the property market crash.
Provisional joint liquidators Eamonn Richardson of KPMG and Eamonn Leahy of Leahy Co have been appointed by the High Court and have taken control of the company to secure its assets, records and bank account. Customers will be contacted individually to assess funds owed to them.
Ms Fitzgerald said she had convened a meeting of a working group of regulators and industry bodies to try and prevent further financial problems developing for customers of the firm.
She said the Money Advice and Budgeting Service, the Central Bank, the Commission for Energy Regulation, the Communications Regulator, the Irish Banking Federation and the Irish Insurance Federation would meet to discuss the implications of its closure and to explore ways in which relief could be made available to people who lost money as a result.
“People paid money to Home Payments for their utility bills and mortgages. and I don’t want to see them having to pay on the double,” she said.
“There needs to be regulation of money management and money advice companies. Home Payments was a good company and one which was in business for 40 years and provided a really good service but there was no regulation and no protection for people who used it,” Ms Fitzgerald said.
She said the absence of regulation meant there was no prospect of investor compensation or deposit protection and pointed out that the financial ombudsman was also powerless to intervene.
Successive governments had focused on dealing with larger financial crisis, managing the bail out and trying to rescue the banking system and ignored the problem of a deregulated sector handling tens of millions of euro of consumers money, she said.
“Debt-management companies have only sprung up in Ireland in the last couple of years since the financial crisis took hold, many of them came in from the UK and have been making promises which they can not deliver on,” she said.
“Many of the people they are targeting are very vulnerable and on their uppers and are being lured by false promises and are paying money they don’t have to unregulated companies for services they don’t need.
We have been pressing for legislation for a very long time now and we will continue to press for it. I don’t think it should have to take that long for legislation to be passed.”
She said it was not acceptable to delay until 2012 or later. “We should not have to wait until next year for this. We have to get it done in the autumn. It is not complex and much of the framework is already in place at the Central Bank.”
In June, Minister for Finance Michael Noonan said he was examining the question of regulating all firms offering debt-management and debt-advice services.
The Department of Finance said yesterday that it was “moving as fast it can” to introduce legislation governing debt-management companies.
A spokesman said, however, that it was an extremely complex area and would take some time. “There are many Government priorities and this is one of them and we are trying to get it done as quickly as possible.”
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