Central Bank Bill 2012

Central Bank & Financial Services Authority Bill

Dáil Éireann, 28th March 2012

Deputy Dan Neville

I welcome the opportunity to speak on this constructive legislation. I welcome the Minister for Finance’s acceptance of the Bill. It will be of great benefit to the Financial Services Ombudsman. The Bill contains provisions to empower the ombudsman to report on investigations and adjudications concerning regulated financial services providers arising from consumer complaints made about their conduct. I welcome the approach taken by Deputy Michael McGrath to Government policy and I welcome the spirit of his comments on the matter yesterday.

Let me raise an issue that has rarely been spoken about concerning financial services providers. Researchers have found that people with mental health problems are three times more likely to be in debt than others as they are likely to be living on low incomes and are unable to work owing to difficulties getting a job because of the stigma associated with mental illness. It is important that debt collection agency staff seek mental health awareness training. Banks should adopt a system whereby customers can choose to have their accounts monitored for erratic spending to better protect their finances. Irish personal debt stands very high at present and this results in a significant mental health cost.

Money worries are not only keeping people awake at night; they are also causing high levels of stress, depression and, in some cases, self-harm and suicide. At a time when people across the country are anxious about their finances, debt depression is real and of growing concern. People living with mental health problems are particularly vulnerable to being trapped in a cycle of debt and poverty and many are unable to work due to ill health. People are becoming dependent on credit to pay for everyday essentials. Those on lower incomes are more likely to get credit from lenders who charge astronomical interest rates. This is a worrying trend as people are left facing a mountain of debt that they have no means to repay.

If we are to tackle this massive inequality and really help people who are struggling with mental health problems and debt, we need to see action by the Government, the HSE, banks, debt collection agencies and other creditors. We hope the Bill will facilitate that. Changes in practice such as waiving fees when a customer has been unwell and introducing mental health awareness training for bank staff would make a difference. Creditors have a duty to help, not hound, their customers, especially when they are coping with serious health problems. People with schizophrenia or bipolar disorder, the manic phase of which can cause sufferers to spend extravagantly, are four times more likely to be in debt than others.

The survey to which I referred states:

Fewer than 1 in 3 people with problem debt informed the organisation to which they owed money of mental health problems because they did not think that they would be understood […] or believed […]. 83 per cent of those who did tell creditors continued to be harassed about debt repayments.

The urgency with which this must be addressed in times of recession was again highlighted by personal debt being a significant factor behind the worsening conditions of those with mental health problems. Up to 50% of respondents to a UK study on those with mental health conditions and personal debts were going without food and heating. The research showed 71% ran out of money every week or most weeks while 87% relied on credit to pay for food and everyday costs. Up to 56% had gone without food due to debt, 21% had gone without heating and 92% reported not being able to socialise.

These are the serious issues facing people under stress because of the current economic circumstances. These are people who never expected to be under such stress, who lost their jobs or are in danger of losing them, have had their incomes reduced or are in danger of losing their homes. This leads not just to stress, but interpersonal, interfamilial and relationship difficulties as well as an increase in alcohol consumption and drug abuse. The personal debt crisis is not just an economic problem, but a social one too.

I hope this issue is recognised by the Financial Services Ombudsman and the banks. Some banks pay lip-service to this problem and even give courses to educate their front line workers on how to handle customers. I urge the financial institutions and the banks to train more of their staff on how to deal with customers with psychological difficulties. We must also tackle moneylending, particularly illegal moneylending, which is trapping, exploiting and abusing people both psychologically and financially.