Alan Shatter (Dublin South, Fine Gael)

This issue is of great importance in the context of this legislation. I am concerned by reports that some financial institutions, in addressing issues of indebtedness and seeking to enter voluntary arrangements with customers who are in major financial difficulty, have suggested that an adequate income for individuals who are working should be no more than what they would receive on social welfare. I think that is entirely unacceptable. That is one of the reasons we may need to put guidelines in place in this area. The sum that an individual will normally retain as part of this type of arrangement - a personal insolvency arrangement, a debt settlement arrangement or a bankruptcy - will vary on the basis of his or her circumstances. It will depend on a range of issues including: whether the person is married; has a dependent spouse; or has any children and, if so, how old they are. The issues that arise should be dealt with on a subjective and individualised basis. Guidelines might be needed to ensure individuals are protected from unreasonable demands being made on them. I would not underestimate the difficulties involved in dealing with this issue. In countries that have more advanced insolvency legislation than we have had to date, this issue has been worked out in practical terms once the legislation has settled down.

I wish to deal with a number of other issues. The external insolvency environment, particularly in the context of the United Kingdom, was mentioned during the course of the debate. Issues relating to insolvency are not confined to what occurs in the UK. For example, the European Union intends to bring forward proposals later this year to amend the current insolvency regulation, as agreed in 2000, which deals with both corporate and personal insolvency. I await the proposals of the European Commission with interest. I will be vigorously involved ensuring the best possible measure is put in place to apply across the European Union. Our efforts in this Bill could provide a very useful blueprint. I noted the concerns expressed by Deputies about the different approach taken to insolvency, particularly with regard to bankruptcy, in our neighbouring jurisdiction. This is a matter over which we have no control. All indications are, frankly, that bankruptcy law in the UK is unlikely to change in the short term.

I am pleased to assure Deputies that the proposed insolvency service, while under the broad remit of the Department of Justice and Equality, will be an independent body and will carry out its required functions with regard to the determination, processing and registration of the new debt resolution processes, in a professional and impartial manner. That is as it should be, given the absolute need for confidentiality and the fiduciary duties that are involved. I emphasise that there will be no role for intervention by a third party, even a public representative or a Minister, in the operation of the debt resolution processes. Allowing any such potential intervention in an individual case could contribute to a negative result. The service will produce a strategy statement and business plan. Its director will appear as required before relevant Oireachtas committees. This is similar to the operation of other agencies. Like other Deputies, I would like to commend the work of the Joint Committee on Justice, Defence and Equality.

My colleague, the Chairman of the committee, Deputy Stanton, published a review of the draft scheme of the Bill in January. The text of the published Bill reflects in large part the concerns of the committee. While I understand the committee may wish to revisit the insolvency area, I am conscious of the tight timetable that will be ahead of us in the autumn. We hope to propose appropriate amendments to the Bill as early as possible following the convening of the Dáil after the summer recess. I hope they will be addressed on Committee Stage, which will take place within the joint committee. It is at that stage that all further issues of a substantive and technical nature can be properly teased out. I believe this Bill is a comprehensive package. I have no intention of taking out the bankruptcy element, as suggested by at least one speaker, and enacting it as separate legislation. I do not believe this would be a good idea.

Some Deputies mentioned the potential impact of this reform on credit unions. Unfortunately, credit unions, like all other financial institutions, have made some poor lending decisions in recent years. They will face repayment difficulties as a result. I have no intention of providing special treatment for them over and above any other creditor. I agree with those Deputies who were rightly critical of past and current behaviour of Irish financial institutions. In many cases in the recent past, the poor and insensitive responses of the institutions have compounded the distress of debtors who have found themselves in difficult circumstances. We need the Irish banking sector to get its act together rapidly and to engage fully and professionally with its clients to arrive at solutions that can work to everyone's benefit and that of the wider economy. As one Deputy remarked, we need them "to get real". The banks have assured us that they will be up to the task of working the new insolvency process. That remains to be seen. It remains the position that when the banks try to engage voluntarily with customers, consistent options are not available to them. Different options are provided by different banks. The reality remains that the banks, separately and internally, have no consistent policy for dealing with those who are totally weighed down by indebtedness and are facing circumstances in which is appropriate to write down debt. In the context of the personal insolvency arrangement, in some circumstances it will be appropriate for some level of debt to be written down if banks are to recoup some portion of the money they lent and if individuals are to get back on their feet.

It is time banks came to terms with this reality in the context of stress testing of banks and the recapitalisation, which included provision for this as a possibility for those whose debts are unsustainable and who genuinely cannot pay and where, without such write-down, there is little prospect of people getting back on their feet without the bankruptcy option, which should not be necessary.

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