Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank Deputy Pearse Doherty for giving me the opportunity to discuss this issue. I wish to focus on three areas. First, I shall respond to the Deputy's claims on what the Government has and has not done. Second, I shall examine the progress achieved, while being very conscious of how much more needs to be done. Third, I shall comment on the Bill and its provisions and outline the rationale for the Government's opposition thereto. I will begin, however, in the spirit in which the Deputy concluded his contribution. I refer to the spirit in which we seek to tackle this issue and the experience he has had in his constituency in dealing with people who face difficulties. I encounter them daily in my constituency work. Considerable pressure and stress have been experienced by people through no or little fault of their own in the aftermath of the crisis. Unfortunately, what most defines the crisis for me is my meeting families who are either dealing with the stress of not being able to pay their mortgages, which is emphasised by the fact that they all want to pay them, or worried about their ability to service their mortgages in the future and facing the terror of losing the family home, in which they might have lived for some time and their children might have grown up. Such families may live in a community in which they want to continue living. As a constituency representative, I have first-hand experience of the strain, stress and misery experienced in these circumstances.

Contrary to what Deputy Pearse Doherty stated, the Government has taken many measures to respond to the scale of the personal debt crisis and the vast strain it is exerting on society. It is in this spirit that I wish to comment on the committee hearings held in recent days and which I followed. There are two areas in which there has been significant Government intervention. I am conscious of the strain on people and shall point to the revised measures put in place by the Central Bank. It made very clear the quarterly targets that needed to be met in terms of the offers of sustainable mortgages and the terms on which and periods in which agreement needed to be reached. I shall point to the measures the Central Bank stated it would implement in regard to banks if the objectives were not met. I shall point to the progress made in putting in place personal insolvency legislation and the Insolvency Service of Ireland. The measures implemented, organisations established and legislation enacted were not in place when we began our response to the crisis that is causing significant strain.

We put our response in place conscious of two factors. First, we need to be able to differentiate between the considerable number of people who genuinely cannot pay because of all of the horrific changes that have taken place in the economy and the group who, for whatever reason, do not pay. Another group about whom we must be conscious comprise the huge number of taxpayers who have put in place measures to support the banking system. We have a duty to them to be conscious of their investment and do all we can to recognise it and ensure the taxpayer is in a position to benefit overall from what has taken place. I am absolutely conscious of the difficulties and strain experienced by individuals and families who are unable to make mortgage repayments and worried about losing their homes.

I have emphasised the measures the Government has put in place. We started from a position where there was next to nothing in place. It is not true to state the measures we have taken have had no effect. We have seen strong signs of their having had an impact, but because we realise we need to fix the problem, we are all conscious of the progress that must still be made.

I refer Deputy Pearse Doherty to the figures that have emerged on the mortgage restructuring that has taken place. I am sure he is aware of them. I am not referring to the engagement that has taken place up to the point of restructuring but to restructuring agreed to by the debtor and the creditor. A total of 59,668 restructurings have taken place, representing an increase of 8,480 on the figure for the last quarter of 2013. It represents an increase of 5,669 accounts since the end of January 2014.

The number of mortgage accounts in arrears for more than 90 days has fallen from 79,420 at the end of January to 78,210, a decrease of 1,210. The number of temporary restructurings fell between the end of January and the end of February, indicating what we believe to be a move towards greater utilisation of the resources available and the permanent restructuring to which I have referred.

With regard to the buy-to-let sector, engagement between consumers and lenders has led to 12,484 permanent restructurings, representing an increase of 2,336 accounts at the end of the fourth quarter of 2013 and an increase on the figure from the end of January.

I wish to contextualise the measures that have been put in place and their effect, while remaining conscious all the time of the strain being placed on people and also our determination to deal with the crisis in a sustainable manner. Deputy Pearse Doherty referred to the hearings of the Joint Committee on Finance, Public Expenditure and Reform in recent days, at which hearings he was present. The Minister will be examining very carefully the contributions made by the various banks and Members of the Oireachtas at the hearings.

The Minister has stated that the policy and way it will be implemented will be kept under continual review. Changes, if necessary, will be made to ensure the considerable crisis we are facing will be marked by signs of improvement and that the measurers put in place will have a beneficial impact. While the Government and I are absolutely clear that while there are welcome signs of job creation and growth in the national income, depending on its various measurements, we must make progress considering the magnitude of personal debt in the economy, its structure and impact on people and their ability to contribute to the economy and society.

I will now comment in detail on some of the specific measures contained in the Bill. I will do so in the order in which they arise in the Bill and Deputy Pearse Doherty has referred to them, beginning with his proposed amendment to section 2 of the 2013 Act. He proposes that, in considering an application for possession of a principal private residence, a court would be required to adjourn proceedings for a period of at least six months.

This proposal does not take account of the additional safeguards the Minister included in the 2013 Act and which he considers already provide the court with a very broad margin of discretion when dealing with repossession applications. The Act already allows the court to take full account of the circumstances of each individual when considering an application for repossession.

In particular, the Act contains two safeguards which are intended to strengthen protection for borrowers in arrears. First, section 2 provides that in repossession proceedings in respect of a borrower's principal private residence, in other words, their home, the court may adjourn proceedings so that a proposal for a personal insolvency arrangement under the Personal Insolvency Act 2012 may be fully explored as an alternative to repossession. The Act provides for an initial adjournment period not exceeding two months with the possibility of further adjournments where it considers that progress has been made on preparing a personal insolvency arrangement. Second, section 3 of the Act provides that repossession actions in respect of principal private residences in cases where the mortgage was created prior to 1 December 2009 must now be commenced in the Circuit Court. Of course, what this does is to put such mortgages on the same footing as housing loan mortgages created after 1 December 2009 under the Land and Conveyancing Law Reform Act 2009. This will help reduce costs and delays for the party. That section in the original Bill is a recognition by the Government of the value people place on their home and a recognition that where possible, everything that needs to be done to allow them to stay in their home will be done while dealing with the level of debt and potential insolvency they could face. Section 2 of the 2013 Act allows a court of its own motion or request to adjourn proceedings to allow a personal insolvency arrangement, PIA, to be considered where none have previously been attempted.

In respect of Deputy Doherty's amendments, which would require the court to issue a series of instructions to the parties involved in the application, the point I want to emphasise is that the effect of this would be to fetter or reduce the discretion of the court in this manner. This runs contrary to the objective that the courts be permitted to recognise and take into account the circumstances of each case in front of them. A further aspect of this proposal is that it fails to recognise that a PIA can only be proposed through a practitioner where a debtor meets the eligibility requirements for such an arrangement and that there are sufficient funds available to make some payments to ground a proposal.

The Deputy seeks to amend section 2(7) of the Act by inserting a definition of "court" to meet the Circuit Court, but that is already provided for in section 3 of the 2013 Act.

I will conclude with observations about section 3A, which Deputy Doherty wishes to insert into the 2013 Act. Subsection 1 seeks to instruct the court to consider a number of issues when it is considering an application for an order of possession. However, in the view of the Minister, such a proposal would seek to put limitations on the courts in dealing with such applications, which could be open to legal challenge. In any event, section 2(3) of the 2013 already provides that when dealing with a repossession application, a court shall have regard to the conduct of the parties in any attempt to reach a solution to a mortgage arrears problem. The Minister believes this provision provides the court with the necessary level of discretion.

I am conscious that I am reaching the end of my time. I will refer to some of the subsections and changes the Deputy wishes to make. I also want to deal with a provision that would require the court to consider, where necessary, a PIA that has been rejected by creditors where the borrower has been given adequate opportunity to appeal the lender's decision to reject the proposal. This proposal misunderstands the way in which the process operates. It is a voluntary process and where the necessary approval of creditors cannot be obtained regarding the proposal, the process ends. There is no appeal to the court in this regard. However, the borrower could through his or her personal insolvency practitioner and where time permits under the protected certificate period propose a new arrangement which could meet with the approval of creditors.

Deputy Doherty would also require the court to instruct a lending institution to respect the terms of any tenancy agreement in place and to assume the responsibility of the landlord in that tenancy agreement. This issue has already been raised during discussions on the 2013 Act, to which I have already made reference. The Minister indicated that he would bring the matter to the attention of the Minister for the Environment, Community and Local Government, who has responsibility in respect of residential tenancies. My understanding is that this matter is now being considered by the Minister and the Office of the Attorney General in the context of the Residential Tenancies Bill 2012. That Bill is awaiting Second Stage in the Seanad having passed through this House. It is expected that any amendment on this issue would be tabled on Committee or Report Stages in the other House.

In the response I have given, I have looked to respond to many of the main legislative proposals contained in the Deputy's Bill. I know this is something other colleagues will be commenting on, as will the Deputy later on in the morning and I will respond to further points that will be made. I emphasise that many of the measures in this Bill were already discussed in the context of the 2013 Act. Some of these measures would reduce the ability of courts to take account of the specific circumstances of the families and individuals in front of them. We believe this would be counterproductive in terms of the objectives of the Bill in the first place. I would put all of this in the context of all of the measures that have already been put in place by the Governments in terms of the new targets and provisions for the banks and the way it is being overseen by the Central Bank and the setting up and implementing of the Insolvency Service of Ireland while making clear that these arrangements will be under continual review to ensure that the crisis of personal debt is dealt with in a sustainable manner.

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