Mr. Lorcan O'Connor:

As the Chairman has already made the introductions, I will begin with opening remarks to highlight progress since we last met in July last. As the Chairman mentioned, the official assignee in bankruptcy, Mr. Christopher Lehane, will address some specific points about bankruptcy and the family home which were specifically requested by the joint committee.

It is important to remember that the Insolvency Service of Ireland, ISI was established only one year ago. When I speak to my counterparts in the Insolvency Service of England and Wales, the Insolvency Service of Northern Ireland or, for that matter, other equivalent organisations, they speak in years, rather than months, when referring to their experiences in their initial establishment or even the roll-out of a completely new business service. Those involved in the regulation of those practising in the financial services sector provide a similar commentary, yet in that relatively short time of one year, from a standing start, we have achieved an enormous amount, both directly and indirectly.

We have developed a whole new legal infrastructure and service dedicated to providing sustainable solutions for insolvent debtors and these solutions are being put in place. While the initial uptake of debt relief schemes by debtors is slow, I am confident that the number of cases in the system will grow significantly in the coming months. The statistics published by the ISI earlier this month point to a trend that is moving in the right direction. The slow start in terms of volumes is mirrored in the experience of other jurisdictions when new debt relief measures were introduced. It takes a little time for people to become comfortable with them. I expect thousands to have availed of our services within the next year.

In terms of the ISI's indirect impact, it is worth remembering that this time last year insolvent debtors were not obtaining debt agreements with their creditors. The position is now very different and the ISI has been a significant catalyst for this change. Until it published its guidelines on a reasonable standard of living and reasonable living expenses, negotiations on allowable expenditure between debtors and creditors never passed "Go". What was once the most difficult aspect of addressing personal over-indebtedness is now not even on the agenda and since the autumn we have seen evidence of a growing number of agreements between insolvent debtors and creditors being successfully concluded. This would not have happened but for the introduction of the new debt solutions and the reform of bankruptcy laws.

Since we met in July last year a number of milestones have been reached by the ISI. In August it began authorising approved intermediaries and personal insolvency practitioners. We now have over 200 practitioners. There are 135 personal insolvency practitioners known as PIPs - they deal with the debt settlement arrangement, DSA, or the personal insolvency arrangement, PIA - and over 80 staff known as responsible persons within MABS offices who have been authorised as approved intermediaries and are trained to help those who wish to apply for a debt relief note. I expect the number of practitioners to continue to rise.

In September we published our strategic plan through to 2016, but, more importantly, we also began to accept applications for the new debt solutions. October saw the first protective certificate issued, while November saw the first debt settlement arrangement approved by creditors. December saw the reduction in the period of bankruptcy from 12 years to three and the formal transfer of the office of the official assignee to the ISI. January saw the first debt relief note issued, while February saw the first personal insolvency arrangement approved by the courts. March saw us take on our 500th case and earlier this month we published our first quarterly statistics report. The ISI will shortly launch an information campaign, in consultation with the Citizens Information bureaux, MABS, PIPs and other stakeholders, a campaign which will include information sessions around the country offering opportunities to avail of one-to-one advice.

I turn to a particular initiative under way that will further assist in increasing the numbers availing of the new alternatives to bankruptcy.

In February this year the ISI hosted a conference for creditors and practitioners in Dublin Castle. A major aim of the conference was to initiate the development of protocols for the DSA and the PIA. Agreed protocols will make the insolvency application process simpler and faster for creditors, practitioners and debtors. The development of these protocols does not require any amendment to existing legislation and is in line with best practice in other jurisdictions. Let me use an analogy: conveyancing solicitors do not write individual contracts for the sale or purchase of houses. If they did, each individual transaction would take far longer than it does and clearly cost a lot more than at present. Instead, for a regular transaction, use is made of the standard terms and conditions produced by the Law Society of Ireland. Similarly, a protocol for insolvency applications will soon have standard terms and conditions that will assist in achieving transparency and greater acceptance rates for all concerned.

At the conference the ISI announced an ambitious target to have the DSA protocol agreed this spring. Thanks to the high level of commitment shown by all of the participating stakeholders, we are on track to achieve this. Members of the steering group and the working group, set up only at the end of February, have already spent over 2,000 working hours on developing the protocol. We have a further session scheduled for this afternoon. Our aim is that the steering group at this afternoon's session will sign off, in principle, on the draft protocol. There are some stages prior to it being issued, but they should take only a few weeks. In the United Kingdom the equivalent process took over two years to develop. We are noting a clear desire among participating stakeholders to have the protocol up and running in as short a timescale as possible. An equivalent protocol in the United Kingdom has resulted in acceptance rates for protocol compliant IVAs - the equivalent of DSAs - exceeding 95%. That is what I want to see happen here. Once the DSA protocol is complete, it will be followed by a PIA protocol which will deal with the additional aspects of secured debt.

While I am proud of what the ISI has achieved in its short existence and while I am firmly of the view that the Personal Insolvency Act and the ISI will assist many thousands of insolvent debtors badly in need of help, it would be remiss of me to ignore recent comments made before the committee by certain creditors. Before doing so, I must stress that the ISI is an independent statutory body with clear functions set out in section 9 of the Act. It is not its role to question a creditor's approach to any given case. We are not pro-debtor, but we are not pro-creditor either. Our primary purpose is to deliver the infrastructure required to facilitate the debt relief notes, the debt settlement arrangements and the personal insolvency arrangements. The concepts behind the debt relief note, DRN, and the DSA are tried and tested in other countries. The PIA dealing with security debt is a new concept. However, the Act carefully balances the interests of both debtors and creditors when dealing with secured debt.

While I was disappointed with the comments made by one creditor, in particular, to the committee, I cannot say I was altogether surprised. The creditor was blunt about how it intended to approach PIAs, in particular. However, making a global policy statement on how it intends to deal with applications does not take full account of the new reality that the new debt solutions, including the PIA, are designed to deliver better outcomes for both debtors and creditors. If a creditor stands in the way of a solution, there are mechanisms available to debtors to deal with this.

Despite the statements made here, on a case by case basis we will achieve solutions for debtors. If, however, I am proved wrong, we hit a brick wall and do not make progress in individual cases, we will report this to the committee and recommend change. At this time, however, only a few months into the process, the sample size of cases is insufficient to make this assessment. Both the Minister for Justice and Equality and the ISI have indicated that the effectiveness of the legislation will be kept under review. If issues arise that need to be addressed, they will be addressed. Monitoring creditor engagement will obviously be a key focus.

In the short term the ISI remains focused on developing the DSA and PIA protocols. While some have been critical publicly of the ISI on the issue of the number of individuals seeking an insolvency solution, I observe that the ISI opened in record time and was taking applications within six months of establishment. Our presence is contributing to breaking a stalemate between stakeholders which, in some cases, has lasted for six years or more.

In addition to providing mechanisms to address individual cases of unsustainable debt, the enactment and operation of the new insolvency legislation have an even broader impact. The legislation redefines the overall framework within which lenders and debtors assess their options for dealing with insolvent debtors. It can already be seen that as a result of the enactment and coming into operation of the Personal Insolvency Act, some financial institutions are taking more active and constructive steps. They are moving towards a long-term sustainable debt solution rather than short-term debt amelioration. This would not have happened without the personal insolvency legislation and the establishment of the ISI. These new debt solutions are not just good for debtors but are also in the interests of creditors. They offer an efficient and fair means of tackling what is a very large problem for everybody. Ultimately, it is in the interests of us all to return an insolvent debtor to solvency to ensure his or her well-being and give him or her the second chance he or she deserves.

I invite Mr. Lehane, the official assignee in bankruptcy and head of our bankruptcy division, to speak to the committee on the recent changes to bankruptcy legislation and what they might mean for a debtor and his or her family home.