Dara Calleary (Mayo, Fianna Fail) | Oireachtas source

I commend Deputy Michael McGrath on proposing this Bill. Members of this House are often accused of reacting to problems and being behind the curve when problems develop. It is suggested that too frequently, emergency legislation has to be rushed through to solve such problems. Inevitably, that legislation turns out to be deficient when issues arise. In such circumstances, we are challenged by judges in the courts to come back and do our jobs. Since 2011, it has been a constant refrain of Deputy Michael McGrath that the family home needs greater legal protection. One of the first Bills that was proposed in this Dáil and in the Seanad, the aim of which was to protect the family home, was turned down. During the pre-legislative hearings into the insolvency Bill, all of the organisations that are at the coal face of this problem and deal with it on a day-to-day basis, including the Free Legal Advice Centres and the Money Advice and Budgeting Service, pointed out that the bank veto would present a difficulty. They said it would cause problems and would result in the welcome ambition of the Bill not being fulfilled. They said it would result in the personal insolvency service basically parking up. I think Deputy Michael McGrath has this evening presented an illusion of a service that has so much to offer but is absolutely handcuffed by the banks having this veto.

Last Friday, I had somebody with me who was previously a very successful business person, having done well in the so-called boom times. We all meet many such people. This person made investments that did not work out and is now having to deal with the personal insolvency service, the personal insolvency practitioner and everything else. He was highly complimentary of the service and of the advice and encouragement he got from the personal insolvency practitioner. He got agreement from all the unsecured creditors, one of which was one of the pillar banks, but when it came to the family home debt, which is secured by another pillar bank, the deal was vetoed by that bank. I will name the bank - it was Bank of Ireland. This gentleman and his family are now in limbo land as they await the inevitable calling in of that loan by Bank of Ireland. When he went through the situation with me, he said it is absolutely ridiculous that after he has been pursued for this debt and evicted from his home, Bank of Ireland or any other bank will then be able to offer a mortgage to somebody to buy that house for what is now the market price, which is a lot less than the value of the mortgage. He is in no position to pay the outstanding value of the full mortgage. He could pay a mortgage on the current value of the house. If he were allowed to do so, he could stay in his house and avoid going onto the housing list. That would give him a chance to get on his feet again. That is not going to happen, however. Instead, the bank is going to pursue him. As Deputy Michael McGrath said, bankruptcy is the inevitable consequence of that. I am talking about somebody who did what he was advised by going through the insolvency service. He went through the tiller with the service and made all sorts of the commitments with it. The service and the payment schedule that was agreed with the personal insolvency practitioner would have addressed many of these issues, but it was vetoed.

When this man and many others like him see that various companies and corporate entities are coming away from the pillar banks with very significant write-downs on corporate loans, and are still trading at big profits and announcing bigger profits as the years go on, it seems to them that there is one rule in terms of write-downs for corporate Ireland and a separate rule for people's family homes. The rule that applies to such people seems to be much more cruel and cut-throat. It seems to be about the ability of the bank to issue new business, while at the same time pursuing somebody for something he or she cannot have. That will continue, and will get worse, as long as we continue with the circumstances this Bill seeks to address. The continuing increases in house prices are exacerbating the situation because the banks think they will finally be able to get a greater value of the loan. I hope house prices will reach a plateau at some stage soon. As that happens, banks will start using the provisions of the Land and Conveyancing Law Reform Acts to start addressing their problems by putting people on the streets. What will we do with those people? We do not have houses or spare accommodation for them. The irony is that the buy-to-let sector, which we do not include in this legislation because it is confined to the family home, will be called in to respond. That sector will face another kind of situation.

The Government will come in here tomorrow night and vote against this legislation. The Taoiseach's advice to people who are in difficulties with their banks is to engage with and talk to their banks and they will be fine. Many people have done that and they are not fine. There are 118,000 families in arrears on their mortgages tonight. Some 60,000 of them are in arrears of more than a year. As Deputy Michael McGrath has outlined, they are in more serious situations. They have engaged with and talked to their banks. The rising property prices, and the bottom line of the banks' balance sheets in advance of their sale, seem to outweigh the importance of the family home. By any measure, the insolvency service is not working despite the best efforts of its staff. I suggest that the Minister should examine another model that this Government brought in which initially did not work. I refer to Microfinance Ireland, which was given a shake-up and a shake-down and had new management put in. I congratulate Mr. Michael Johnson, the Minister, Deputy Bruton, and the Minister of State, Deputy Nash, on the work they have done in this regard.

It is beginning to do it be effective, it took tough decisions about its remit and the expansion and examination of that remit. What was initially intended did not work and the same must be done to the Insolvency Service of Ireland. What was initially intended is not working if only 119 people have managed to go through the service successfully in 16 months. Comparing that to where we are in terms of outstanding liabilities, no one can say the service is fulfilling its remit. We have some time to re-engage it, redesign it and refocus it on family homes to stop the avalanche that is about to happen.

It is extraordinary that the document of the people, the Constitution, Bunreacht na hÉireann, is being used against family home owners and small property owners when in the view of the Attorney General, upward only rents are protected by the Constitution that is supposed to stand up for people. There are property rights for pension funds but not for small family homeowners or small-business people. That Land and Conveyancing Law Reform Act has made the situation more inevitable and made it easier for banks to foreclose on the family home and take the door, literally, from under people.

When it comes to introducing competition into the banking market, there is no willingness and no encouragement to do so. When we get funding from Europe, we invest it in the two pillar banks in mortgages or the small business finance market. It is extraordinary that we are not seeking to empower the most local and the most democratic of all financial institutions, the credit unions, with an ability to deal with the situation. Those options, including the many options in this Bill, offer a reasonable solution and one that is practicable and does not require extra cost. What the Taoiseach said today was off the ball. We are saying that we should empower the Insolvency Service of Ireland with extra powers and resources to do the job outlined in the Bill, which it was originally intended to do in February 2012 when the pre-legislative stage started. The promise of the service, in terms of the problems that existed, could have been much greater.

Most of the 118,000 family home mortgages will not have RTE outside their doors for the six o'clock news in the evening to protect them if the bank comes after them. One must have a big house in south County Dublin to get that. Tonight, families across the island are not sleeping, who do not know where they will be sleeping and are looking to us as legislators, and coming into our offices every day looking for assistance and a solution to keep them in the family homes. This is not to get a free pass on debt, as 95% want to co-operate with the Insolvency Service of Ireland and come to some arrangement on debt. There is a willingness to do this but the service is not being given the tools to do so. I ask the Minister not to allow another opportunity to protect family homes of the people on this island to pass.

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