‘Over the next two evenings, the Dáil will debate the most comprehensive piece of legislation brought before the House to deal with the personal debt and mortgage difficulties facing thousands of people,’ said Fianna Fáil Finance Spokesperson Michael McGrath prior to starting the debate on The Debt Settlement and Mortgage Resolution Office Bill 2011 during Private Members’ Time tonight.
‘The legislation we are bringing before the Dáil this week proposes to establish an independent, non-judicial debt settlement system which can deal with both personal debt and mortgage debt. Such a system has been called for by the Cooney report (November 2010), the Keane report (October 2011), the Financial Regulator Matthew Elderfield, the Free Legal Advice Centre (FLAC) and a range of organisations assisting people struggling with personal debt and mortgage difficulties.
‘This bill is based on the recommendations of the Law Reform Commission’s Report on Personal Debt Management and Debt Enforcement of last December and the associated draft Personal Insolvency Bill. However, we decided to widen the scope of the Personal Insolvency Bill to include the growing problem of mortgage debt. We are bringing the bill forward on a non-partisan basis and offer it as part of the overall solution needed to deal with the reality of personal debt and mortgage problems in Ireland today.
‘In response to the Keane report last week, FLAC expressed frustration at the speed at which reform in this area is moving and said there has been ample time to make a start “on what is by now beyond urgently needed.” I support that view and this legislation brings forward, for the first time, the most comprehensive reforms to help those in personal and mortgage debt difficulties.
‘Financial Regulator Matthew Elderfield raised this issue in an address to the Association of Compliance Officers in Ireland, UCC last Friday (October 14th) when he stated “the importance of settling the key policy issues in this reform as a matter of some urgency and, if you like, bringing the debate on mortgage arrears public policy more generally to a settled conclusion so that there is certainty about the rules of the game…….until that happens it will be difficult to make progress on the unsustainable mortgage problem.”
Deputy McGrath concluded: ‘There will be an opportunity for the Debt Settlement and Mortgage Resolution Office Bill to be discussed in full in the Dáil this evening and tomorrow and I am hopeful that all TDs – Government, opposition and Independents – will recognise the need to move on this issue immediately and avoid any further delay to providing the help that people need to tackle their debt problems.”
What have experts said?
Inter-Departmental Mortgage Arrears Working Group (Keane report), September 30th 2011
The early reform of personal insolvency legislation will be a central element in the resolution of the mortgage arrears problem by providing a catalyst for change in the relationship between the mortgage lender and the distressed mortgage holder. Rapid progress will be necessary in this area to provide for certainty on both the judicial and non-judicial mechanisms and to allow settlements to be reached. Such mechanisms need to be carefully calibrated to ensure that there is no suggestion that borrowers can easily leave outstanding debts behind them.
Free Legal Advice Centre (FLAC), October 12th 2011
The group [Keane report] does not call for a formal agency either to oversee any new personal insolvency legislation or the implementation of mechanisms outlined in its report, and merely mentions that the publication of such legislation is planned for next year. “In its final report on personal debt issued in December 2010, the Law Reform Commission published a draft ‘Personal Insolvency Bill’. Surely there has been ample time over several reports to make a start on what is by now beyond urgently needed.” – Senior Policy Researcher Paul Joyce.
Matthew Elderfield, Deputy Central Bank Governor (Financial Regulation) Addressing the Association of Compliance Officers in Ireland, UCC, October 14th 2011
There is a logic in both bankers and borrowers holding back from taking action on the unsustainable mortgage problem in the knowledge that the legal framework that will govern this shortfall is due to change in the near term through bankruptcy reform and the introduction of a non-judicial debt settlement mechanism. That points to the importance of settling the key policy issues in this reform as a matter of some urgency and, if you like, bringing the debate on mortgage arrears public policy more generally to a settled conclusion so that there is certainty about the rules of the game. Until that happens it will be difficult to make progress on the unsustainable mortgage problem.
Mortgage Arrears and Personal Debt Group (Cooney report) 16th November 2010
The Group is of the view that significant reform is now required in regard to Ireland’s personal insolvency regime. Such reform must have the broad objective of bringing about an efficient and cost-effective process for the settlement of arrears of personal debt. The Group would see the reform as consisting of two main parts:
(i) new and modernised bankruptcy legislation with a less punitive approach, in cases where fraud or culpable negligence is not at issue, to replace the Bankruptcy Act of 1988; and
(ii) a non-judicial debt settlement and enforcement system which would be an alternative to bankruptcy in most cases.