HUNDREDS OF customers of the bill-payment and budgeting firm Home Payments Limited could face substantial losses following the company’s closure yesterday.
The family firm, founded in 1963, provides household budgeting and saving services to customers, many of whom earn low incomes and paid all their household utility bills through the company. In a statement posted on its website, the company directors said Home Payments would “cease operating with immediate effect” to “protect its customers and secure customers’ deposits”.
They said the company was in discussion with its lenders and revealed that it was a victim of the collapse in the property market.
“Home Payments made investments in the property sector. The decline in values in this sector has had a significant negative impact on the value of these investments,” the statement said.
Many anxious customers who tried to call in to the firm in Rathmines yesterday found the office closed and unoccupied. The blinds were drawn over all the windows.
“I’m due to receive about €1,200 to pay all my bills next month. I don’t know where I’ll get that money from now,” said Miriam O’Connor (27), a customer for more than five years.
“I never gave the company permission to invest my money in property,” she said.
Debt management firms are not regulated by the Central Bank so customers cannot participate in its investor compensation fund, which acts as a fund of last resort when investment firms go bust.
The National Consumer Agency said the Government should move urgently to legislate for the regulation of all companies that take money from consumers for debt management or payment.
Ann Fitzgerald, the agency’s chief executive said: “This is a clear case of an industry that urgently requires regulation so that clients’ funds are legally required to be ring-fenced and therefore protected in cases where a company ceases trading.”
The agency advised customers to cancel direct debits to the firm.
In June Minister for Finance Michael Noonan said he was examining the question of regulating all firms offering debt-management and debt-advice services.
Home Payment’s most recently published accounts for the year to the end of March 2010 give an indication of how the firm got into financial trouble. At that time it owed creditors €7.07 million in the following 12 months and a further €2.1 million was to fall due after more than one year.
The directors, listed as Eamonn O’Connor and Niamh Ryan, restructured the business in spring 2010 following an annual loss of €129,525. They also announced they were considering the disposal of some properties.
“The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future,” say the accounts, which showed the firm reported net assets worth €2.82 million at March 31st, 2010.
Auditors McFeely McKiernan drew attention to the company’s inability to properly value freehold and investment properties – carrying amounts of €1.27 million and €3.05 million respectively in the accounts – due to the unstable nature of the property market.
Home Payments owns 100 per cent of a property firm based in Hungary, O’Connor Property Consulting KFT, which suggests there may have been some exposure to the Hungarian market. The balance due to Home Payments at year-end by O’Connor Property Consulting KFT was €1.64 million, according to the annual accounts.
The Irish Timeswas unable to contact Mr O'Connor and Ms Ryan. Mr O'Connor was listed as a director of O'Connor Insurance Ltd in March 2010. The firm said yesterday he no longer was connected to it.