John O'Mahony (Mayo, Fine Gael)

I welcome the opportunity to contribute to the debate on the Personal Insolvency Bill 2012. Much of the debate since the financial crash in 2008 has revolved around sovereign debt, bondholders, reckless bankers, bank guarantees, etc., but the impact of all that is what we are discussing in this Bill, that is, the thousands of families that have been affected by personal debt.

The recession in the 1980s and early 1990s consisted mainly of sovereign debt. In that period, banks were more responsible and people were more cautious, but at the height of the Celtic tiger era, when there was probably a letter a week coming from the financial institutions dropping through the letterboxes of the public offering massive sums of money with little security, and in some cases even suggesting the properties that should be invested in, 100% mortgages were the order of the day. Not only was the price of the house given, but so too was that of the landscaping, the 4X4s and the furniture. A culture grew up in which ordinary people felt that they were not cool or were not part of modern society if they did not have a property portfolio. Unfortunately, many innocent people bought into bad advice and now must live with the consequences, and this Bill is about living with those consequences.

I very much welcome the Bill and the Minister's attempts to address what is an urgent and complex issue. No Bill will solve the problems overnight. There is no silver bullet. The clock cannot be turned back on this issue and the problem must be met head on, and that is what this Bill does.

There has been criticism - Deputy Ross continued it - that the bank or lender still holds a veto and the balance of power. I was surprised last week when I went to a briefing by FLAC and other non-governmental organisations where some of them were suggesting this Bill is unworkable, something with which I would not agree on studying it. I was taken aback by some of the suggestions being made. The Government has faced up to what is a mammoth and complex task and is putting a structure in place that will not solve everybody's problem but at least will give a chance to thousands of people to have a normal life again and to have a secure home to live in.

I would have a number of concerns and I want to highlight them briefly in my contribution. One, which was highlighted last week by Deputy Durkan, is the imposition of penalties and compound interest which, if extracted to the full, will completely bury thousands of people. I strongly suggest these should not be the tipping point to put people over the cliff. Thousands of people are struggling valiantly and keeping up their interest payments, and they should not be pushed over the limit with these extra penalties.

I want also to raise the plight of those who have an adverse credit rating with the Irish Credit Bureau as they cannot now borrow for their daily needs, get a credit card or even open a bank account. Typically, these are self-employed business persons or employees of companies or of the State who bought investment properties in the past ten years. They invested much of their savings as deposits and borrowed the balance from the bank, or offered their own home as security and borrowed the full property cost from their banks. They were encouraged to do so by the property sellers and by the readily available credit from the banks. They may have purchased houses, apartments or holidays, but these were effectively a pension for the future of these people. Their intention in buying them was to generate some wealth for their old age or for their children. There were thousands of them. They were not speculators, developers or gamblers, but they now find themselves in arrears with their loan commitments to their banks because their business incomes or salaries have fallen and their rental incomes have fallen or reduced substantially. They fully intend to repay all their debts, even if it will take a longer period, but they are now much less well off and have a much reduced standard of living, and they are coming to grips with that. If they have other assets, they will sell them, often at a reduced value as that is the only way to offload them at present, merely to generate funds to reduce their banking liabilities. They are now left unhappy that their noble intentions are not recognised or reciprocated by the financial institutions. They cannot continue to live their lives as before because of their adverse credit ratings. With the loans being in arrears, their credit rating is affected. They cannot borrow from the bank to replace the family car, send their children to college, or fund weddings or funerals. Even if they clear their debt entirely, their adverse credit rating will remain with them for a further five years.

There is nothing in this Bill to help these people and I suggest an amendment should be made to it to address the adverse rating of these ordinary and genuine people who find themselves in this position for the first time in their lives. Their ability to use the borrowing facilities of the banks also affects the level of spending in the economy and frustrates the small and medium-sized business sector's efforts to grow again. The authorised debt adviser or personal insolvency practitioner roles, as outlined in the Bill, do not address their situation because they continue to work and generate income which they are using to repay their debt. They are the ignored victims of this banking crisis who deserve some recognition and support in their efforts to regulate their affairs.

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