Mr. Paul Joyce:

There is another dimension to this. While the services that MABS provides are excellent, the money advisers and particularly the dedicated mortgage arrears advisers in MABS do very detailed, one-to-one work with clients. What remains a problem is the fact that a person has no right to legal representation from the State in the form of the Legal Aid Board in cases of repossession proceedings. Civil legal aid is subject to a means test on the one hand and a merits test on the other. People seeking to defend themselves in repossession proceedings could fail the means test very easily because the threshold is quite low. A review of the civil legal aid scheme is ongoing. Even if an applicant passes the means test, they are also subjected to a merits test. If an applicant is persistently in mortgage arrears and cannot make the payments, it may be considered that there is no merit in defending the individual's position. In From Pillar to Post, we outlined how we believe a defendant borrower being on their own during repossession proceedings in the courts is essentially a breach of the European Convention on Human Rights and fundamental freedoms in terms of access to a remedy and legal representation to defend one's position. It is also true that many of the long-standing cases that are heard a number of times still result in possession orders being granted. Our view, as outlined earlier, is that taking repossession proceedings out of the courts and dealing with them in an alternative dispute resolution mechanism might be a better way of dealing with this issue. It is important to say, because we are talking about vulture funds, that we do not know what they paid for the portfolio of loans. Nobody seems to know this. However, there is likely to have been a substantial reduction in price. As loans travel further along the chain, they can be sold on again. The room for a write-down has yet to be explored in a fundamental way.

As outlined in From Pillar to Post and in our opening statement, we are very disturbed by the lack of progress made in the review of the Personal Insolvency Act, which provides for PIAs to resolve mortgage arrears cases. The statutory review of the Act should have taken place by the end of 2017. There is a review going on in the Department of Justice, but we are still awaiting the results of that. There is a major problem around older borrowers. The Central Bank of Ireland published a number of research papers in recent years. One paper published in July states that 95,000 borrowers were in long-term arrears. Many of those borrowers had their mortgages restructured and are in alternative repayment arrangements such as split mortgages. As time goes by, they get closer to having to start paying the warehoused element of those split mortgages. It is extremely difficult terrain but, at the moment, an individual cannot get a PIA, involving a debt-for-equity swap that may go beyond the person's lifetime, without the secured creditor's consent.

In the context of our final From Pillar to Post paper, we conducted a review of three recent High Court rulings. In each case, the judge felt he had no option but to reject the arrangement based on what was in the legislation. In each of the cases, the presiding judge suggested that this needed to be addressed and that legislative reform, in addition to a detailed discussion of the options and what should be done, needed to take place fast. That was 18 months ago, and we still do not have a review of the legislation. While the sale of loans came into operation quite quickly and has mushroomed, the suite of solutions for defendant borrowers has been slow to develop.