Mr. Edmund Honohan:

Borrowers in arrears are in trouble and are now entitled to be offered forbearance terms that are reasonable. One might say they were entitled to that in the first place under the 2019 Act. I remember that Act; Members possibly do not. It went by in a flash and nobody paid any attention to it, but Professor Kenna mentions it in his submission. He says that this set forward a template for assessing how the Circuit Court judge should deal with a possession case or a repossession case. It basically said that, first, in cases where the PIP transaction had failed, he should then consider proportionality as regards the situation that had arisen and that presented itself in court.

The Act also mentioned alternative bodies which might be designated by the Minister as providing a similar mechanism to the PIP but not on an insolvency bases. The great benefit of this directive is that it is not at the courtroom stage that the forbearance engagement takes place. It is supposed to take place before proceedings commence. This is why I call it the new moratorium. Once proceedings commence, they really should be injuncted and stopped if reasonable efforts have not been made. We have a situation where a lender can claim to have made a reasonable offer and is communicating that to the Central Bank. The Central Bank can then say that is okay and invite the lender to issue proceedings. That requires a borrower to go back to court and apply for an injunction on the basis that the offer made was not reasonable and the process undertaken was not in accordance with what the EU expects us to do and not what the Central Bank expects us to do, which is very little. The hard law will kick in before the proceedings commence and that is of immense importance to borrowers.