Paschal Donohoe (Dublin Central, Fine Gael)

I thank the Ceann Comhairle for selecting this issue for debate and thank the Minister of State, Deputy Hayes, for attending the House to respond to it.

I was prompted to raise this issue as a result of a desperately sad case in which I became involved last week - which has received some coverage in The Irish Examiner - having visited a family who have been touched by the unbelievable tragedy of losing a family member through suicide. The financial circumstances of the family at the time of this sad event are likely to have contributed to what happened. At the very least, they created an environment where pressure became acute and unbearable for someone. I have looked at the chain of events leading up to this sad event and at the financial transactions which led to the creation of that environment. There is no doubt but that mistakes were made by many parties along the way, including, tragically, the family involved.

I want to focus on a particular part of that chain, namely, the general role played by mortgage brokers and financial intermediaries. Much of what I learned in terms of regulation, if any exists, in this sector caused me concern. The family concerned received a mortgage, the application form for which contained no evidence of a bank account. Also, the person granted the mortgage did not have life assurance, was not able to produce evidence of income and had already built up mortgage arrears from a previous mortgage. Despite this, a mortgage many times the amount of the original mortgage was granted.

A particular link in this transaction is the role of the mortgage broker-intermediary who received information from the family and used that information to apply for a mortgage which the family had no ability to repay. As I stated earlier, responsibility rests everywhere. However, money was loaned to people who had no ability to repay it. The money should never have been given to them.

From my review of this sector since then, a number of things have become clear. We need to move quickly from a system of registration to regulation. That is essential. Whatever regulation exists needs to be strengthened and a number of new features need to be added. First, we need to have at the core of this sector protection of the borrower, in particular a borrower who could become vulnerable in the future. Second, we must have in place a system of cross-referencing. As I understand it, a person in this sector against whom there is a ruling from the financial ombudsman can continue to practise, including under a different name or different company. I would appreciate clarification on that point from the Minister.

Money is being transferred from clients to brokers to banks. There must be in place a system that ensures there is a verifiable paper trail of money transferred and that this is done by people who should be doing so. My final point relates to insurance, in particular run-off insurance. For example, where a solicitor who is no longer in operation is sued because of something he or she did when in operation and the person taking the action is successful he or she will be paid from the solicitor's insurance. As I understand it, no such policy exists in respect of mortgage brokers who are now becoming debt intermediaries.

The Central Bank is currently investigating the case in which I am involved. I believe these matters need to be urgently brought to public attention. I would appreciate if the Minister of State could clarify in his response what regulation currently exists in this sector and if the general thrust of what I have outlined in terms of the need for a strengthened regime can be acted upon. It needs to be.

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