Noonan plans law changes to regulate debt payment firms
THE Government is to change the law to regulate debt management companies.
The move comes after the Central Bank told consumers to stop paying money to debt manager Dunne & Maxwell, which subsequently closed.
Finance Minister Michael Noonan has now decided the Central Bank (Supervision and Enforcement) Bill 2011 would be amended at committee stage to regulate debt management, debt advice firms and firms that pay bills for consumers.
He told Fianna Fail's Michael McGrath he had asked his official to quickly put the legislation in place.
Mr 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 mushroomed in recent years as personal debt levels increased substantially."
He said some distressed borrowers had signed up to seemingly attractive offerings of some providers but found themselves in further financial trouble and in a less secure situation.
Accountants from Ernst & Young have been engaged by the Central Bank to audit up to a dozen bill payment and debt management companies.
The companies were told to submit to regulation or cease trading.
In the last two weeks the Central Bank advised clients of Dunne & Maxwell to stop making payments to it after finding that it was not passing on the money to banks and insurers for its clients.
It emerged that a director of Dunne and Maxwell had his credit licence revoked in the UK in 2005 because he had undisclosed convictions.
Adam Deering (30) was the director and secretary of Dunne & Maxwell.
In the last week a firm that paid bills on behalf of consumers has shut, raising fears that some people who used the service may end up behind on their payments.
Rents & Co, based in Crumlin in Dublin, has written to customers this week to say it was closing.
Last summer the collapse of Dublin-based Home Payments Ltd left consumers out of pocket.