Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I move amendment No. 1:

To delete all words after "Dail Eireann" and substitute the following:"- acknowledges that this Government inherited a severe mortgage arrears crisis;

- recognises that the Government has already taken a number of significant steps to address the mortgage arrears problem;

- in particular, acknowledges that the present Government established the Interdepartmental Mortgage Arrears Working Group and subsequently published the group's report in October 2011;

- notes that the group's report indicated the mortgage arrears problem is complex and that a range of measures, such as personal insolvency reform, the development of mortgage-to-rent, the provision of mortgage advice, direct engagement by banks and the development of sustainable options by banks for their customers who are experiencing mortgage difficulty, need to be advanced to address the problem;

- recognises that the Government has moved to implement the main recommendations of the Interdepartmental Mortgage Arrears Working Group report; and that a special Government committee, chaired by an Taoiseach, is overseeing the implementation of the measures across Government;

- acknowledges that significant progress has now been made, including the fact that:

-- the Personal Insolvency Act 2012 was signed into law on 26th December, 2012;

-- the Insolvency Service of Ireland was formally established on 1st March, 2013;

-- the Mortgage-to-Rent Scheme is now available across the country; and

-- a Mortgage Advisory Function is now in place;

- encourages the Government and other authorities to continue this work, in particular to enhance action by mortgage lenders to appropriately address unsustainable mortgage loans;

- notes that the Government has taken steps to address a lacuna in the law arising from the High Court decision in July 2011 which created uncertainty in the law relating to the exercise by lending institutions of their repossession rights;

- notes the targets set by the Central Bank requiring the main mortgage lenders to offer durable solutions to mortgage holders over 90 days in arrears;

- notes that the latest Central Bank mortgage arrears and repossession statistics for end March 2013 show that there was a total stock of 79,689 principal dwelling house mortgage accounts classified as restructured and that 76 per cent of these are deemed to be meeting the terms of their restructured agreement;

- acknowledges the Central Bank's initiative of the Framework for a Pilot Approach to the Co-ordinated Resolution of Multiple Debts owed by a Distressed Borrower;

- notes the revision of the Central Bank's Code of Conduct on Mortgage Arrears; and

- recognises that there are provisions in the Central Bank's Consumer Protection Code for Licensed Moneylenders which provide protections to consumers in relation to the debt collection activities of licensed moneylenders."

I welcome the opportunity to speak on the issues raised by the Deputies and to set out the Government's achievements in this area and our strategy in moving forward. The context for the mortgage arrears and high level of indebtedness is the economic downturn. The Government is deeply committed to addressing the failures of the last Government and to generating economic recovery, growth and jobs. We want to produce an environment where mortgage holders can pay for and stay in their homes and where those who have difficulty in meeting their financial commitments are provided with an opportunity to resolve their problems and begin again to contribute to society. The Government is very much aware of the difficulties some homeowners face in meeting their mortgage obligations and we are committed to advancing appropriate measures to assist mortgage holders who are experiencing real difficulty. I would like to outline to the Deputies the steps we have taken, as well as our continued efforts in assisting citizens who face difficulties with mortgage arrears.

A Cabinet sub-committee on mortgage arrears, chaired by the Taoiseach and with a membership comprising the Tánaiste, myself, the Minister for Public Expenditure and Reform, the Minister for the Environment, Community and Local Government, the Minister for Social Protection, the Minister for Justice, Equality and Defence, and the Minister of State with responsibility for housing and planning has been established to provide strong political support for the implementation of policy measures designed to assist households struggling with debt arrears. This Government sub-committee acts to reinforce the co-ordinated response to the mortgage arrears crisis and to drive the development of the personal insolvency legislation and the implementation of the other recommendations to tackle the mortgage arrears problem as set out in the Keane report.

At official level, a high level steering group meets on a fortnightly basis to co-ordinate and drive the implementation of the strategy and to receive and monitor the reports from the relevant Departments and agencies on the implementation of their respective areas of the overall strategy. This group, which is chaired by the Secretary General of the Department of Finance, consists of senior officials from the Department of Finance and from the Departments of the Taoiseach, the Environment, Community and Local Government, Justice and Equality, Social Protection and Public Expenditure and Reform, as well as from the Central Bank of Ireland and the Insolvency Service of Ireland. The work of the steering group is built around the following pillars: personal insolvency law reform and implementation; mortgage to rent schemes; a mortgage advisory function; and engagement with the banks to develop appropriate measures for customers in mortgage arrears.

The establishment of the Government sub-committee and the official high-level steering group clearly signal that the implementation of effective and appropriate measures to tackle the mortgage crisis is a key policy priority for the Government. It also indicates that a co­ordinated national strategy, premised on interdepartmental co-operation, has been adopted to address the critical problem of rising household debt distress.

Personal insolvency reform was identified by the Keane report as a catalyst for addressing the mortgage arrears problem. The report indicated that without an effective insolvency system, the mortgage arrears problem will not be resolved. The introduction of the new Personal Insolvency Act provides new statutory insolvency frameworks to allow debtors and creditors to reach arrangements on unsustainable mortgage and other personal debt. The Personal Insolvency Act 2012 provides for three new debt settlement frameworks. The first is a debt relief notice to allow for the writing off of debt, subject to conditions, up to €20,000 for persons of "no assets or no income", subject to a supervision period of three years; the second is a debt settlement arrangement for the agreed settlement of unsecured debt, normally over a period of five years; and the third is a personal insolvency arrangement for the agreed settlement of both secured debt of up to €3 million and unsecured debt without limit, though the upper limit can be increased with the agreement of creditors, normally over a period of 6 years. The Act also provides for reform of the Bankruptcy Act 1988, which is critical to providing for automatic discharge from bankruptcy, subject to certain conditions, after three years. It also provides for the establishment of the new Insolvency Service of Ireland to operate the new insolvency frameworks.

A number of concerns have been raised about the balance of power between banks and debtors, which has commonly been referred to as a "bank veto". The reality is that it is in the best interest of both debtors and creditors to seek to conclude an acceptable and workable bilateral arrangement under the Personal Insolvency Act, be it a debt settlement arrangement or a personal insolvency arrangement. It should be noted that the framework set out in the Personal Insolvency Act in respect of creditor consent is essentially that as recommended in the Law Reform Commission report from 2010. Both debtors and creditors have rights in a financial contract and these must be respected, having regard to the insolvency of the debtor. Of course, in the event that neither a debt settlement arrangement nor a personal insolvency arrangement can be agreed between debtors and creditors, the ultimate resolution option is and remains judicial bankruptcy.

The Insolvency Service of Ireland, ISI, was formally established on 1 March 2013 following the signing of the establishment order by the Minister for Justice and Equality. An information campaign was subsequently launched last April. The campaign included the publication of guides to the three new arrangements - debt relief notices, debt settlement arrangements, and personal insolvency arrangements; the launch of the ISI website, which contains various scenarios of how the new arrangements may work in practice; the launch of an information line for the public; and, crucially, the publication of guidelines on a reasonable standard of living and reasonable living expenses for debtors.

Deputies will be aware that last month the ISI published updated guidelines on a reasonable standard of living and reasonable living expenses to reflect consumer price index information to March 2013. This is important to ensure that personal insolvency practitioners will use the most up-to-date information available when formulating proposed arrangements.

Regulations providing for the authorisation of approved intermediaries and personal insolvency practitioners have been signed and the ISI is now receiving and processing applications from those who wish to be authorised to act in that capacity. Once a fully completed application is made, the ISI expects to be in a position to issue an authorisation within ten working days. It is expected that debtors will be able to contact practitioners and begin to receive advice from them in the second half of July, and the ISI expects to begin receiving applications for debt relief notices and protective certificates shortly thereafter. A number of professional bodies have already provided training courses to those interested in applying to become a personal insolvency practitioner, PIP, and it is likely that the number of applications for and the authorisation of PIPs will increase steadily throughout the summer.

Furthermore, the Government has nominated six special judges for appointment to the Circuit Court to deal with personal insolvency matters and these will be in place to provide the necessary judicial oversight when insolvency cases start to be processed. As Deputies will be aware, the Courts Bill 2013, which is currently before the Oireachtas, also contains the legal and practical requirements necessary to transfer the function of official assignee in bankruptcy from the Courts Service to the Insolvency Service of Ireland. The Bill will also include a number of other necessary amendments, mostly of a technical and drafting nature, to ensure the proper functioning of the provisions of the Personal Insolvency Act.

The Deputies' suggestion that senior officials in the Department of Finance and in the Central Bank are predicting a significant number of repossessions is incorrect. Indeed, at the weekend the Governor of the Central Bank publicly indicated that he hopes that very few family homes will be repossessed. The suggestions by Deputies of large-scale repossessions as a matter of course are not helpful and, given the role Fianna Fáil played in the mortgage crisis, they should be more responsible with their statements.

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