Jonathan O'Brien (Cork North Central, Sinn Fein)

I welcome the publication of the Personal Insolvency Bill 2012. It has been long awaited, considering the heads of the Bill were published last January. It was important it was at least published before the summer recess. Hopefully, we can get Second Stage done and dusted before the recess because the sooner we take Committee Stage, the better.

Sinn Féin gives the Bill a cautious welcome. It has to be seen as part of a process. While the Bill itself will not solve the issue of debt in society, it certainly has the potential to help it. There has been much discussion around elements of the Bill and how it will impact. My reading of it is that it is not sufficient enough to do what many people, particularly those in mortgage distress, were hoping it could do. This is a matter that needs to be examined. I have no doubt many families followed the debate about this legislation over the past several months and were hoping for something that would give them a little more hope than what is proposed in the legislation. There will be a certain level of disappointment with the Bill as drafted.

Since the heads of the Bill were published, there has been much discussion at the joint committee with a number of submissions from a broad range of groups and advocates including New Beginnings, MABS, FLAC, the bankers and small businesses. There were detailed discussions at the justice committee but many of the issues pointed out during that process have, unfortunately, not been taken on board with the final draft. This has been a very frustrating part of the process. We pretty much have the same as what was published in the heads, give or take one or two minor additions. This was a missed opportunity to take on board all of these concerns and produce legislation that could really transform how we tackle insolvency and debt in society.

The Bill proposes the establishment of an insolvency service which will provide licensing for and approval of the intermediaries and personal insolvency practitioners. The proposal is that these intermediaries will play a key role in advising debtors, negotiating debt settlements and administering the terms of such settlements. The Bill proposes three arrangements in dealing with insolvency. The first is debt relief notices which are aimed at debtors who possess almost no income or assets. This will be administered by approved intermediaries at no cost to the debtors. The second is debt settlement arrangements which are aimed at those who do not fall within the very strict criteria of debt relief notices. The third is the personal insolvency arrangements which will operate in a similar fashion to the debt settlement arrangements but will allow for the inclusion of secure debt. The Bill will reform existing bankruptcy rules by reducing the period for bankruptcy from 12 years to three years. This is to be welcomed but on Committee Stage we can discuss why we settled on a three-year term and how it will impact on its implementation. In other jurisdictions, the term is less and I would have preferred to see a two-year term.

The functions of the insolvency service will go a long way in determining how effective this legislation will actually be. There is no doubt the Bill, published only last Friday, is complex and lengthy legislation. It would be impossible to touch on all aspects of it today in the time allocated. That is why Sinn Féin will also not be opposing it on Second Stage. The quicker Committee Stage is taken, the quicker we can examine the Bill's detailed aspects and proposed amendments.

The eligibility criteria for debt relief notices are too restrictive. For instance, in addition to being insolvent with no realistic chance of becoming solvent, the specific eligibility criteria includes a debtor having a net disposal income of less than €60 per month after certain expenses are deducted and assets or savings worth €400 or less. What constitutes an asset? Essential household appliances, for instance, would not be taken into account when assessing a person's assets. What is an essential household asset? Is a dishwasher an essential household asset? Will a television, a PC, personal jewellery, a wedding ring or an engagement ring be taken into account when assessing someone's assets? This is an area that will have to be examined in more detail on Committee Stage as I believe the figure in question is too low and restrictive.

The personal insolvency practitioners will propose the DSAs, debt settlement arrangements, and broker their terms. The Bill suggests several ways how they may deal with debt including a lump sum payment to creditors, payment arrangements, transfers of properties and the sale of specific assets for the benefit of creditors. It also outlines creditors of the same class will be paid in proportion to the size of the debt owed, unless otherwise agreed. Certain debts will be considered preferred debt. This is another area which will have to be examined in great detail on Committee Stage.

The personal insolvency arrangements have received the most media attention. We know they will operate in a similar manner to their debt settlement arrangements but it will also allow for the inclusion of secure debt. The whole area around the voting rules which are needed to reach an agreement are difficult to agree with. There is no doubt the criteria need to be reconsidered. The Bill states that a debtor must owe a debt to at least one secured creditor holding security over an asset or property situated within the State and that said debtor must make a statutory declaration to the effect that he or she has co-operated with his or her creditors for at least six months in the context of dealing with any mortgage arrears on his or her principal private residence. In other words, he or she will have had to have engaged with a mortgage arrears resolution process.

My main issue with the Bill relates to the voting rules. There is no getting away from the fact that banks will retain a veto in respect of this matter, that there will be no legal obligation on them to accept what could turn out to be very reasonable applications from customers who are in arrears and that there will be no right of appeal in respect of decisions the banks make. The latter has the potential to leave debtors with no option other than to declare bankruptcy. I have heard quite a number of comments, particularly from Government backbenchers, to the effect that this Bill is radical in nature. If one considers the current framework relating to personal insolvency, then any legislation brought forward would obviously appear radical.

I have no doubt the Bill is going to have an effect. To be honest, however, we do not know how many people it is going to assist. While a great deal of the focus during the discussions on the heads of the Bill concentrated on the technical details, namely, the rights of debtors versus those of creditors, voting rights and the type of debts involved, very little emphasis was placed on the impact to which the Bill might actually give rise. When the Bill was published last week, the Department provided some examples with regard to how it might help certain individuals. However, no real substantive work has been done in respect of the broader implications of the legislation. For example, a regulatory impact analysis has yet to be carried out. In addition, we do not know what will be the Bill's impact on the wider economy. We know how it is going to impact on individuals because the Department provided examples in this regard but there is no indication on how will affect the wider economy. In that context, we do not know how much debt could potentially be written off. Neither do we know how the Bill is going to affect credit institutions, the behaviour of debtors and creditors etc. All of this remains to be seen.

The real test with regard to whether the legislation is going to be effective will come when we are in a position to evaluate if it is going to prove to be of assistance to the hundreds of thousands of people who are struggling with debt. How many of these individuals are going to be able to avail of the provisions contained in the Bill? There is no question that it is going to help a certain number of people. I was not present for the Minister's contribution but I listened to it on the monitor in my office and I am aware that he provided some projections in respect of the number of people who might avail of the Bill's provisions. We must ask whether this is really going to deal with this matter in an adequate fashion.

Account must be take of the fact that some people's circumstances are becoming worse all the time. Other policy initiatives and additional legislation must be introduced by the Government in order to try to ensure that people will not get into situations where they will be obliged to avail of what is being proposed in the Bill. If we do not scrutinise the Bill very closely on both Committee Stage and Report Stage, we will fail to grasp the nettle fully in respect of this matter. Potentially, we could lose out on an opportunity to deal comprehensively with the issue of personal debt once and for all.

As already stated, Sinn Féin will support the Bill on Second Stage. We are eager for it to be referred to the select committee in order that we might draft amendments and have them discussed as soon as possible. On Second Stage, Deputies tend to have their say in respect of legislation but they do not really discuss it in detail. The sooner we begin to tease out the relevant issues the better it will be for everyone.

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