Limerick Fianna Fáil TD Niall Collins has described the new Personal Insolvency legislation as a missed opportunity to address the debt crisis facing thousands of people. Deputy Collins has questioned the decision to allow banks dictate progress.
Deputy Collins said: “This legislation is long overdue. It has taken six months for the Government to progress this vital issue while the scale of the personal debt crisis facing thousands of people has worsened. However the worst fears of many people have been realised. The legislation falls short and is a missed opportunity from the government. I know from my own constituency that many people in Limerick are feeling under enormous pressure with debt and mortgage payments.
“I welcome the decision to reduce the bankruptcy discharge period to bring it into line with the European norm. But one crucial issue has been overlooked. There is no appeal mechanism. If a financial institution uses their unfair influence in the process the borrower has nowhere to turn.
“There is a unique opportunity for the Government to break the hold the banks have over borrowers and the State. The Bill as published requires that creditors holding 65% of a person’s debt agree with the proposed debt settlement arrangement or personal insolvency arrangement. For the vast majority of people, this will mean their bank is still in control. There will be great unease about this in Limerick and Fianna Fáil will be proposing amendments to improve this Bill as it goes through the Dáil. The banks cannot hold an unfair balance of power in this process.
“We need to ensure in this legislation that there is an appropriate balance of power between financial institutions and borrowers. When read alongside the decision to restrict access to Mortgage Interest Supplement relief, there is a real danger that the Government’s response to the mortgage crisis is increasingly relying on the good faith of bankers.
“We are concerned that the Government appears paralysed by the scale of the mortgage crisis with 10.2% of all private residential mortgages now in arrears of more than 90 days. The banks have not stepped up the mark to date in tackling this issue and have similarly failed to support the SME sector to stimulate the domestic economy.
“Our view is that, where a person’s total debt level is clearly unsustainable, the best way of dealing with that is through a comprehensive assessment of that person’s financial position by an independent statutory non-judicial debt settlement office. We have brought forward sound legislation to allow such an office, but the Government has refused to examine the proposal.
“If we are to learn anything from this crisis it is that the banks cannot be left to progress these issues as they see fit. This is not a banking issue. It is a social and economic issue that must be addressed by Government and driven by an independent body. The new Insolvency Service of Ireland must be well resourced and I am concerned that the Government is not dealing with this crisis with the speed necessary to give confidence to borrowers in difficulty.”