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Back to School Costs a Burden for low Income Households (Press Release 7th August 2007)
The cost of sending children back to school can be a big worry for parents living on a low income. As costs per child for clothing, footwear and school books are considerable it is a very heavy burden on parents who have to fund this cost from their normal household budget. MABS is often approached by parents, in October and November each year, who because they have had to borrow for back to school costs are in financial difficulty.
Parents on a low income, who have not already done so, should apply to The Department of Social and Family Affairs for the Back to School Clothing and Footwear Allowance. This allowance gives €180 for each eligible child aged 2-11 on or before 30th September 2007 and €285 for each eligible child aged 12-22 on or before 30th September 2007. While the allowance will go some way towards the overall cost it will not be sufficient to cover all the costs associated with returning to school.
MABS advises parents to plan now for going back to school.
MABS gives the following advice:
1. Make a list of all you need to buy and fund e.g. uniform, school books, school materials, photocopying, school trips, sports gear etc.
2. Try to estimate the cost of each item – be realistic – check the prices.
3. Try to find ways to keep these costs to a minimum.e.g. Is there a book rental scheme in the school?
4. Add up the total cost.
5. Check if you might be eligible for the Back to School Allowance or other welfare payments.
6. Once you've finally agreed on the overall cost, consider ways you might pay for it.
7. Calculate how many weeks there are between now and when you need to buy – how much will you need to save each week to cover the cost? Can you do this? Where will you save – the Credit union is a good option for saving, allowing you access to credit, if needed.
8. If you cannot save the full amount, can you reduce costs anywhere?
9. Remember that your everyday bills still have to be paid after this.
10. If you feel you have no option other than to borrow, please remember:
• Consider how much you can afford to repay each week
• Consider how long you will need to repay
• Shop around for the best rate – look for the lowest APR - this is the actual cost of borrowing – it appears as a percentage (%)
• Only borrow the amount you actually need
• Try to avoid borrowing from Money Lenders / Doorstep sellers – they will cost you much more in the long term
• If you are still in doubt about your budget or have concerns about debt, contact your local MABS office.
Editorial Note:
The Money Advice and Budgeting Service is a Free, Confidential and Independent service for people in debt or at risk of getting into debt. It is funded by the Department of Social and Family Affairs. It has 65 offices nationwide staffed by professional money advisers. Local MABS service details are available at this link..
For more information contact: Michael Culloty at 087 7978966
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Most Vulnerable not protected by The new Consumer Protection Code (Press Release 19th June 2007)
The Money Advice and Budgeting Service (MABS) welcomes the Financial Regulators request to the Department of Finance to bring the sub-prime mortgage lenders under its authority thus making them subject to the new Consumer Protection Code that comes into force on the 1 st of July . It surely is incongruous to have a consumer protection code that does not apply to that section of the financial services market that targets the most vulnerable consumers.
There is growing concern among money advisers as to the effect sub-prime lending is having on home ownership. While it must be acknowledged that the sub prime market facilitates some consumers to enter the property market and others to remain as homeowners we are concerned that vulnerable customers are increasingly facing Repossession Orders or are being forced to sell their homes.
While it is recognised that the sub-prime lenders fills a gap in the market we are concerned that this type of lending may and does lead to people losing their homes.
We have the following concerns:
* Many of the products are heavily advertised and may cause people to borrow more than they can really afford.
* Proof of income is not always required. This could lead to borrowers overstating their capacity to repay
* That equity lending may be the prime motivation of the lender rather than the consumers income or ability to repay
* Many debt consolidation and remortgage products are being supplied by sub-prime lenders. Borrowers are running the risk of losing their homes if they default on the loan.
* Those sub-prime lenders who have authorisation from other jurisdictions and are non deposit taking companies will not be subject to the Consumer Protection Code and consequently the most vulnerable consumers are least protected.
* Sub–prime lenders feature among those lenders much quicker to commence court proceedings and to higher courts for relatively small arrears so giving rise to greater costs.
* Some sub-prime lenders often leave little or no room for negotiation.
With the present price of property and the continuing increase in interest rates it is plausible to surmise that consumers, under pressure to buy or hold on to a home, will turn increasingly to the sub-prime market to provide mortgages or to borrow their way out of a difficulty. There is an urgent need, in our view, to have these companies subject to the new Consumer Protection Code and for a public information campaign on these products to inform the consumer of the dangers inherent in them.
Editorial Note:
The Money Advice and Budgeting Service is a Free, Confidential and Independent service for people in debt or at risk of getting into debt. It is funded by the Department of Social and Family Affairs. It has 65 offices nationwide staffed by professional money advisers. Local MABS service details are available at this link..
For more information contact: Michael Culloty at 087 7978966
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MABS Calls For More Credit Choices For Low Income Families (Press Release 20th April 2007)
The Money Advice and Budgeting Service (MABS) welcomes the publication of the Financial Regulators ‘Report on the Licensed Money Lending Industry'.
While, as the report states, that only 2.5% of the €67.6million owed by clients approaching MABS in 2006 was owed to Moneylenders, most loans were for relatively small amounts. These loans are owed by clients on very low incomes who found it necessary to borrow relatively small amounts from moneylenders, in order to meet an immediate need as they had no savings or other credit sources available to fall back on.
As is evident from the report people access credit from moneylenders in order to pay bills, fund the purchase of clothes and household items, cover school expenses or to provide for family events like Christmas, First Communions etc. Also the report finds that a large proportion of customers don't seem to be able to get ahead and clear their debts (30%) and feel trapped by credit (23%).
These findings demonstrate that while people on a basic income may have just enough to get by on they have little or nothing left to provide for any contingencies that may arise and have to rely on relatively expensive credit. We would encourage the Financial Regulator to look at the rates of interest being charged by the industry as well as encouraging competition.
The lack of knowledge of the interest rate being charged on loans offered by moneylenders demonstrates the need for targeted information campaigns. While the Licensed Money Lender provides a good, albeit, more expensive service MABS would recommend that the choices available to low income consumers should be widened and products, similar to those supplied by moneylenders, designed.
Access to the broad range of financial services, vital in today's society, is very often not available to low income households. This problem needs to be addressed, in our view, by providing basic banking facilities for all through the high street banks or the post office network.
We in MABS are concerned that 11% of respondents admitted to being aware of illegal moneylenders. This demonstrates that Illegal moneylending is still alive and active in poor areas and in the Traveller and Ethnic Communities. In our view very little has been done to rid ourselves of this illegal activity to spite the powers afforded the authorities in the Consumer Credit Act 1995.
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Editorial Note:
The Money Advice and Budgeting Service is a Free, Confidential and Independent service for people in debt or at risk of getting into debt. It is funded by the Department of Social and Family Affairs. It has 65 offices nationwide staffed by professional money advisers. Local MABS service details are available at this link..
For more information contact: Michael Culloty at 087 7978966
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MABS welcomes Gas and Electricity Consumer Codes but are disappointed at the narrow definition of ‘Vulnerable Customer'
(Press Release 26th March 2007)
The Money Advice and Budgeting Service (MABS) welcome the new consumer codes, launched today by the Commission for Energy Regulation (CER), governing the gas and electricity market and the establishment of a Special Service Register for vulnerable consumers.
MABS, however, is disappointed at the restrictive nature of the application of the Special Service Register available only to people over 66 years, living alone or with other elderly or minors, people on life support equipment and people with mobility, hearing and sight disabilities.
We in MABS are aware of many consumers, who because of poverty and/or medical/psychological illness, some having the care of young children, are extremely vulnerable and we would ask the Commission for Energy Regulation (CER) to create a mechanism to protect these consumers by ensuring that the essential supply of energy will not be disconnected without the intervention of an appropriate third party chosen by the customer. Disconnection of electricity and gas supply for whatever reason has a disproportionate effect on low income and vulnerable consumers with serious cost and health implications.
We are of the view that serious efforts should be required of utility companies supplying essential energy to the domestic market in differentiating between the customer who can't pay and the customer who won't pay . Disconnection should be an action of last resort and not just a speedy mechanism for the collection of arrears . We would welcome the availability of data from the Commission on the number of domestic disconnections that take place particularly during the winter months and the urban/rural areas where they most occur.
MABS is concerned at the effect the high cost of energy and the increased connection charges and bond values being required is having on low income households who have no access to a bank account. Low income households are required to pay, up front, between €700 and €1000 to be connected to basic household services if they are unbanked and do not have a direct debit facility available to them. In our view this is an unacceptable burden on the poor.
MABS have seen a large increase in the number of people coming to the service with substantial arrears on both their gas and electricity bills. We would be concerned that arrears accumulation by domestic customers has more to do with income inadequacy rather than with any irresponsibility.
As there is now an increased onus on customers to read their meters for billing purposes we propose that a targeted information campaign be launched to inform consumers of the importance of regular meter reading. Efforts must also be made to assist those with numeracy and literacy difficulties in understanding complex utility billing systems and metering technology.
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Further information:
Michael Culloty
Tel: 01 8058546
Mobile 087 7978966
Email: michael_culloty@mabs.ie
Editor:
The Money Advice and Budgeting Service (MABS) is a free confidential Service for people in debt or in danger of getting into debt. It has over sixty offices nationwide staffed by professional money advisers. It is funded by the Department of Social and Family Affairs. Its website address is www.mabs.ie
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Statistics for 2006. Over 70% of MABS clients Live on Social Welfare (Press Release 4 Jan 2007)
The vast majority of clients availing of the Money Advice and Budgeting Service (MABS) are on social welfare or on a very low income, are mostly between the ages of 26 and 65 and over 60% are female according to end of year statistics published today by the Money Advice and Budgeting Service.
The MABS service saw over 15000 new clients in 2006
MABS was set up over a decade ago primarily for people on low income and social welfare who are in debt or in danger of getting into debt. It is funded by the Department of Social and Family Affairs.
“It is families on low incomes, struggling to bring up children, that most frequently get into financial difficulty with 57% of MABS clients coming from households with children,” said MABS.
Over 50% of people using the MABS service are living in rented accommodation.
Single adults make up 24% of people coming to the service with 13% of clients in the 19 to 25 age group.
While the numbers are relatively small (16%) there is a significant increase in clients coming to the service as a result of divorce and separation.
Over half of MABS clients live in rented accommodation and 37% of people attending are of single parent households.
There are a growing number of people in good employment getting into financial difficulty mainly due to a change in life's circumstances impacting on their ability to maintain their heavy borrowing commitments. These clients' borrowings make up the greater portion of the € 79 million owed by new Clients presenting to MABS in 2006. Over €60 million would be owed to financial institutions.
The remainder is owed to local Authorities, Money Lenders and utility companies. While this makes up the smaller portion of the amount owed it represents a large number of small debts owed by the vast majority of clients attending the service. Much of this debt is owed to money lenders, gas, electricity and telephone companies and Local Authorities.
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Further information:
Michael Culloty
Tel: 01 8058546
Mobile 087 7978966
Email: michael_culloty@mabs.ie
Editor:
The Money Advice and Budgeting Service (MABS) is a free confidential Service for people in debt or in danger of getting into debt. It has over sixty offices nationwide staffed by professional money advisers. It is funded by the Department of Social and Family Affairs. Its website address is www.mabs.ie
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