Martin Mansergh (Tipperary South, Fianna Fail)

Fine Gael's Private Members' Bill proposes that a debt collector regulator be appointed under the remit of the Financial Regulator. The various initiatives taken by the Government in respect of people who have fallen into arrears with their mortgage repayments are relevant to the discussion. The Government supports efforts to find alternative non-judicial approaches to the resolution of debt problems, in particular, the work of the money advice and budgeting service of the Department of Social, Community and Family Affairs. MABS's approach, which is based primarily on the willingness of a debtor to attempt to manage his or her situation, offers significant prospects for a successful resolution of the credit problem. The banks and their umbrella body, the IBF, are also aware of the problems relating to debt and have co-operated with various initiatives to cope with the unfortunate increases in debt problems in these difficult times.

As regards the proposal that a debt collector regulator be appointed under the remit of the Financial Regulator, even if it were decided that a formal regulator of debt collectors was to be set up, putting him or her in the Financial Regulator structure would not be the best option. The collection of debts involves more than collecting debts in respect of the provision of financial services, whereas the role of the Financial Regulator is confined to such services. The functions of the regulator include helping consumers to make informed and responsible decisions on their financial affairs in a safe and fair market and fostering sound and solvent financial institutions which give depositors and other consumers of financial products confidence that their deposits and investments are safe. It is not the role of the Financial Regulator to regulate the collection of debts arising from commercial or other activities.

Giving the debt regulation function to the Financial Regulator would dilute its core function and would have an impact on its resources and expertise. Debt collection is an activity that takes place throughout the country. The enforcement of licensing requirements would need to be carried out at a local level and this would also result in the Financial Regulator having to take on an enhanced role throughout the country. The financial services industry is rather more centralised than the debt collection process and it would be required to obtain additional expertise in enforcement methods. In addition, consideration would need to be given to the funding of a new debt collector regulator, as the Financial Regulator is funded by levies imposed on those whom it regulates and not by the Exchequer.

I respect the initiatives the Government has taken in respect of people who have fallen into arrears with their mortgage repayments. The House well understands this is a major area of indebtedness and I would like to outline the arrangements in place to deal with this issue. With regard of support for payment of mortgages, the mortgage interest supplement administered by the community welfare service of the Health Service Executive on behalf of the Department of Social and Family Affairs provides assistance where the mortgage relates to a person's sole place of residence. People in debt or in danger of falling into debt can also avail of the services of the Money Advice and Budgeting Service, MABS. This is a national, free, confidential and independent service.

The recapitalisation programme announced in February 2009 includes a new code of conduct for mortgage arrears, which was issued by the Financial Regulator and came into force on 27 February 2009. The new code applies to the recovery of debt in relation to mortgage lending activities to consumers, in respect of their principal private residence in the State. It is mandatory for all mortgage lenders registered with the Financial Regulator, including so-called sub-prime lenders. Under the code, where a borrower is in difficulty, the lender shall make every reasonable effort to agree an alternative repayment schedule; consideration should be given on a case-by-case basis to alternatives such as deferral of payments, extending the term of the mortgage, changing type of mortgage or capitalising arrears and interest; and lenders will not commence legal action for repossession until after six months from the time arrears first arise.

In addition, as part of their recapitalisation scheme, AIB and Bank of Ireland have agreed not to commence court proceedings for repossession of a principal private residence until after 12 months of arrears appearing, where the customer continues to co-operate. While the efforts of Fine Gael to address the problem are well intentioned and praiseworthy, the proposed Bill is not the best way forward.

See this speech in context