I thank the Minister for his very detailed speech and I compliment him and his officials on the huge amount of work that has gone into the preparation of this incredibly detailed legislation. We agree with the broad thrust of the Bill and we will be supporting it on Second Stage, but we will table quite a number of amendments on Committee Stage. I welcome the fact that the Minister is committed to getting this through the legislative process by the end of the year. We will endeavour to facilitate him in that as far as we can, while hoping to work with him in improving the provisions of the Bill. I also wish to acknowledge the role of the Law Reform Commission and the many organisations that have worked on this issue for so many years.
I acknowledge the presence in the Chamber of Deputy Stanton who, as Chairman of the Joint Committee on Justice, Defence and Equality, was manager of many hearings earlier this year. The provision of the heads of the Bill at an early stage has enhanced the debate and enhanced our ability to take part in that debate. I recommend that any Deputy proposing to speak on this over the next few weeks would take a look at the report prepared by the all-party committee and the submissions made that will guide them through the many intricacies in this area.
The fact that there will be 21,000 applications under the different streams outlined in the Minister's speech highlights the gravity of the problem we are addressing. It shows how real this is. We often discuss legislation in this House and one wonders what impact or relevance it has on people's lives. This will clearly impact directly on many lives. Those looking in on this debate and looking for a solution need to engage in this process early. The Minister gave a health warning towards the end of his speech on people's individual circumstances, and that is incredibly important. I am concerned about the management of the process and the issue of personal insolvency practitioners, but I will come back to that later.
While the focus in the committee hearings was often understandably on mortgage debt as a result of the property crash, the extent of general personal debt is not fully understood in this country. The challenge people face on personal loans, credit card debt and other loans is an area that really has not had full and proper debate, especially in the restructuring of the banking sector. If this process allows us to highlight that, then it will be of further benefit to the various people involved.
The Minister referred to an ultimate appeals mechanism whereby if people do not use common sense and do not agree, then the various bankruptcy provisions kick in at that stage, and that this will be there as an incentive to encourage debtors and creditors to come to some sort of sustainable arrangement. While he is introducing welcome fundamental reforms to the bankruptcy area that come on top of the legislation introduced this time last year, the reality is that there will still be a huge cost attached to going into bankruptcy. It is not something that will be entered into lightly. People with a fear of going into bankruptcy are still concerned that the threshold in terms of creditors is still incredibly high. I know the Minister has said that it is the international norm, but if somebody is dissatisfied with the negotiation process, there is no appeals mechanism and that was a consistent theme of many of the groups that attended the committee. We need some sort of appeals mechanism. If there is dissatisfaction with the service provided by the personal insolvency practitioners, will the insolvency service have some role in that?
The key weakness in the Bill is the lack of some kind of third party arbitration process. We will be tabling a number of solutions to this on Committee Stage. We have brought forward legislation on the establishment of a debt settlement agency and this was accepted on Second Stage in advance of this Bill. We are looking for some kind of MABS agency that will arbitrate on the issues. Our legislation provides for an independent arbitration role to allow people access another channel if their interaction with this service was unhelpful.
The Minister indicated in his remarks that it was his intention that it would be the legal and accountancy services which would take up the area of personal insolvency practice. That is welcome, but it needs to be backed up early on with some element of regulation. I am concerned that some of the people who, under different guises, guided many people into the arrangements for which we are now legislating will reinvent themselves as personal insolvency practitioners. Those involved in financial services and property over the years suddenly see a niche in the market where they can, like Superman, step into a telephone box and come out as the champion of those in difficulty. The danger in this area is very clear unless we have very strict regulations. These people will be dealing with very confidential information pertaining to other people's money, so there is an intention in the legislation of putting some bonding arrangement in place. There needs to be some sort of role for people who have a difficulty with their personal insolvency practitioner. There needs to be a mechanism where such a practitioner can be controlled and cautioned. Then there is the question of the fees and the management of the process. Potentially somebody could be involved as a personal insolvency practitioner for between five and eight years. What will such a practitioner's fee be? What guidelines will be available to those thinking of going into this process? People enter into this process under a huge burden of debt. They are looking for some sort of solution and this process is being held up as a potential solution, so it is important that those who guide them through that solution do not add to that ongoing debt issue and are properly qualified and regulated.
The other difficulty is that while much of this legislation is very strong, it is inconsistent with what is going on in other parts of Government and other Departments. The Minister said he sees MABS as having a key role, which we all accept. As every Deputy and Senator is aware, however, while MABS is doing a fantastic job at present, it is completely under-resourced. I accept that is not Deputy Shatter's Department but the Minister, Deputy Burton, needs to get her act together in regard in to MABS. If there are potentially to be 400 applicants a week, MABS will become one of the first points of contact, as it already is for many who will enter into one of these processes. In order to manage that system and the extra work associated with it, MABS will have to leave aside other people who need its assistance. A specific effort needs to be made, particularly as we move towards budget time, to get the agency up and running by January in order to align resources for MABS in this context.
There is an inconsistency between the Bill and some other Government decisions. For example, the Bill requires six months co-operation, similar to the Central Bank code of conduct in regard to mortgage arrears. That is welcome because one of the big issues and challenges in dealing with this issue is the "can't pay, won't pay" debate. I have to say the Minister has gone a long way in this Bill to addressing that issue. This is not an easy process for anybody. When people see the options laid out in colourful graphs in newspapers, they should not be in any doubt of the demands that will be placed on those getting involved in any of these processes. However, in the changes to mortgage interest supplement introduced by the Minister, Deputy Burton, there is a requirement for a 12-month agreement between those looking for mortgage interest supplement, which many will seek under this legislation, and their banks. The Minister, Deputy Burton, needs to get with the programme to a certain extent and bring her Department into line with the thinking of this legislation and that of many of the groups which are involved at the coalface.
There is also the issue of the demands on the Free Legal Advice Centres, FLAC, and on free legal advice generally at present given the demand that will arise from people looking for advice about their options from that service. They too need to be resourced.
An issue I have often raised is that of an information campaign around this legislation. When we have the Bill passed, the agency should have a budget of some type in order to inform people of what is available, what are their rights and, equally, what are their responsibilities. It is enormously complex. There are so many people who are dependent and so many looking for some sort of solution to very serious problems. They may think such a solution is contained in this Bill, which it undoubtedly is. One of the good things the Minister did last week was to publish various case studies, although, to come back to the Minister's remarks, every individual's circumstances are different. We need a very detailed information campaign to educate and inform people of what is available in this regard.
The Minister outlined figures suggesting there may be 400 applications per week under this process. I welcome the clarification he gave in regard to the Circuit Court and the involvement of the county registrars. However, if we consider the volume of people who will get involved in this process, there will be a huge extra burden on county registrars, who have a relatively quiet existence at present. Will they be resourced and what role will they have in dealing with this in terms of their day-to-day interaction with the new insolvency agency? If somebody has a difficulty with the process, will there be some sort of area to deal with this?
One of the most important points the Minister made was that he intends to recruit a director general designate of the new service. It would be good to think we have somebody in place in a designate role before we come to Report Stage so they could be involved in looking at what is coming through, because this is the person to whom we are going to entrust the running of this agency. That person will obviously bring experience in this field to the job from either within the island or internationally. That experience and background will assist us if the person is in place before we finalise the legislation.
To have the service up and running by 1 January is ambitious although, legislatively, we will do everything that needs to be done. Nonetheless, on the practicalities, I am assuming the Minister has all of this cleared with the Minister, Deputy Howlin, in terms of sanction for the appointments in order that the Minister, Deputy Shatter, can go ahead in a kind of twin-track process and have that team in place. The Minister, Deputy Shatter, knows there is such pent-up demand for solutions that, as soon as that agency goes live, a considerable volume of people will seek its assistance. The worst thing we can do, having offered people innovative solutions, is then to have the delivery mechanism let them down. The Minister referred in his speech to IT failures. If we have a systems failure at the start of what is a whole new era for our management of debt, this will damage people's faith in what is an incredibly important new organisation.
I referred to the various restrictions in place about the "can't pay, won't pay" issue. It is important these are in place to discourage those who would seek to use this to avoid their responsibilities. Most people will not, it is fair to say, but there will be a coterie who will see this as an easy way out of their responsibilities. The danger of this, as we have noted in other debates in the justice field, is that when people go around flashing their wealth and material possessions after having been in one of these processes, it will undermine the entire system and will undermine society's faith in the system being fair.
This again comes back to the role of the insolvency practitioner and the agency. There are criminal sanctions for those who give false information and those sanctions need to be used early on. The message needs to go out early that this is not a solution for those who won't pay. This is not a golden card for those who want to avoid responsibility. It is a solution for those who, for whatever reason, are in a position they currently cannot get out of. The fresh, new start this offers will give them a chance.
The discussion has understandably focused on mortgage debt but the Bill also provides a new platform for enterprise. The change in the bankruptcy culture and the insolvency culture will make it a little easier for those with an idea they think is worth pursuing actually to go down that road. What we need in terms of a change in legislation is a change in culture in this country. If people, for whatever reason, through no fault of their own, end up in this process, that is the way it is. They tried their best not to do so, and people need to respect that and allow people to move on with their lives. The encouragement this will give to the enterprise side and those seeking to promote employment is particularly welcome.
The committee hearings produced many different views on the threshold. I welcome the fact the Minister has reduced it from what was outlined in the heads of the Bill to the 65% mark, although that is still very high. For many people, this will be the owner of their mortgage or credit card, namely, the bank. People need to know beforehand that when they invest or engage in this process, there will be some sort of fairness. This is why we need to flesh out the whole area of independent arbitration. It is the one major weakness in the legislation that there is no independent arbitration. While the Minister has pointed to constitutional and legal issues, surely in the context of what is game-changing legislation, we can look at this and give people the final element of security in terms of having them engage with the system by knowing they will get fair play and a fair hearing. If they do not, there is then a final court of appeal to exhaust.
This is hugely important and hugely detailed legislation and I commend everybody involved in it. As I said, we will not oppose its passage on Second Stage. I hope the Whips will ensure it passes Second Stage ahead of the summer recess and that we can enter into Committee Stage early in September and get that side of it done.
Again, I reiterate my suggestion that it would be beneficial for the legislation and, ultimately, for the insolvency service if the agency's recruitment process could be finalised before we finish the legislation so those to whom we will pass the responsibility on 1 January next year will be involved at some stage towards the end of the legislation's passage and may bring additions to it. I look forward to the debate. For those participating in it, it would do them no harm to read the report from the joint committee to see how serious the problem of personal insolvency and debt is and to go through the provisions outlined in the Minister's speech.